Introduction:Especially in these crazy times, we need an emergency fund ready for the unexpected. You should aim for 6 months living expenses saved for emergencies. Here are the top five reasons you need an emergency fund. Make it a priority! Put yourself on safer ground by having what you need in a liquid account if and when you need it! Be sure to read my article about how to stop living paycheck to paycheck and start an emergency savings fund. The link is found at the end of this article under "Supporting Links."
You rely on your car every day. Without it, can you even get to work to make money at all? You need an emergency fund to cover things like new tires, a blown out transmission, or any unexpected repairs. Auto problems can cost hundreds or thousands unexpectedly. You also need money in case, heaven forbid, you are in an accident. Do you have enough to pay your insurance deductible? If not, you are setting yourself up for major problems.
What if your hours are cut down? What if you lose your job through no fault of your own? Will you have enough to allow you to carry on normally? Can you pay your rent or mortgage during the lag time until you receive severance or unemployment? Without an emergency fund, would you be able to cover your living expenses on a reduced income? If and when you get another job, you may need money to relocate. That can cost in the thousands, even if you rent a U-Haul.
Medical insurance doesn't cover everything. Most of us, if we even have medical coverage, are being required to pay more and more out of pocket every year. You need at least enough to cover your insurance deductible for the year. If you don't have medical insurance, do you have enough to pay for an illness or injury?
Unfortunately, sometimes people die, and you need to have enough money to fly to a funeral. If you have an emergency fund, you can do this. If you don't, you may have to make the agonizing decision not to go, or you might end up using a credit card, which costs you a lot more because of interest payments. Having an emergency fund available will leave you able to grieve without extra financial angst on top of it all.
You will feel so much better, knowing that you are prepared for most difficulties that may come your way. Keep your emergency fund separate in a special account that you can access within a week. Build it up, and let it sit. Whenever you think about it, your emergency fund will give you a secure feeling.
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