In today’s uncertain times, a person would be foolish to not have an emergency fund. Rising unemployment rates, widespread home foreclosures and rising costs of basic necessities are a sign that the economy is not yet recovered from the recession. Even if you have been fortunate enough to have a decent job and you are maintaining your lifestyle, you never know when an unexpected event can change your financial picture.
The people who go through their daily routine thinking that it cannot happen to them and fail to plan for emergencies are the ones who get hardest hit. A sudden medical illness that keeps you out of work can be financially devastating. Disability payments cannot replace a regular paycheck and if something happens that keeps you from returning to the kind of work you are used to doing, how will you pay the bills without an income?
Job security is another issue that many people take for granted. Just because you have managed to escape lay-offs in the past, doesn’t mean that you are immune to them in the future. No one is irrereplaceable. This is another reason why having an emergency fund is a necessity. Unemployment benefits do not replace a paycheck. Becoming re-employed can take time and if your benefits run out before you find another job you will need some finances to sustain you.
Some people do not have an emergency fund because they feel that they cannot afford to save money. In these uncertain times, you cannot afford not to. Anything that you are able to set aside in a savings account will come in handy if an emergency arises. Check your spending habits and see where you can possibly cut back in order to contribute to building up an emergency fund. Realizing the importance of having an emergency fund will make it easier to set aside money.
Even if you never experience a life-changing event such as losing your job or battling a major medical condition, there are other kinds of life events that may warrant the need for an emergency fund. A major car repair could be a very costly expense that an emergency fund would come in handy for. Not every repair is covered under car warranties, if you have one on your vehicle. Cars wear out and break down. Being prepared for a costly repair will help you to avoid maxing out your credit cards. You need a vehicle to get to work and not having the funds to repair your car can put your job in jeopardy.
Make a plan to start saving money and set up an emergency fund today for peace of mind.