There is no doubt about it that life is full of surprises. All manner of things can happen to put you in difficult financial straits, but that doesn’t mean that you can’t be prepared to deal with them. Setting up an emergency fund is a vital step that you should take now if you haven’t done so already. To illustrate just how important it is to have one of these, we are going to be talking about a few life shocks which could happen to you at some point down the line.
Job Loss
Whether you are fired, made redundant or choose to leave your job for personal reasons, having an emergency fund provides you with that safety net while you get back on your feet. That is why it is a good idea to have a few months salary in reserve in case you need it.
Sudden Life Change
There are some things which are very difficult to plan for. A sudden illness is one of them, and even if you are covered medically, you may end up with a loss of income. Even worse, a death in the family could happen. Having some money to spare helps you to do things like deal with funeral costs, and deal with the loss in your own way. Though no one likes to think about these things happening, you are better off being prepared in case they do.
Cost of Living Increase
The shock that occurs could be something as simple as a cost of living increase caused by a sudden change in the economy. Your rent may suddenly skyrocket or your household bills could take a sudden upward turn. Having an emergency fund will help you to cover these costs while you get your finances back on track.
Car Expenses
If you rely heavily on your car, any problems that occur could cause you a major financial headache. Even simple repair work can be costly, let alone having to pay for a replacement. This is a stressful situation for anyone, but having an emergency fund can help to mitigate against this, so you can get back on the road as soon as possible.
Major Household Repairs
Even if you have insurance to deal with the most obvious issues, there are still plenty of minor ones which could hit your wallet. When you are deciding whether or not to dip into your emergency fund, determine how much of an emergency the household repair is and whether or not it is something you can delay until the next payday.
Unexpected Move
Perhaps your company has transferred you to a new office or you need to make a sudden move to be closer to your family. There are all sorts of expenses involved in this including movers, temporary housing, and the costs involved in furnishing a new place.
So, hopefully, this article has encouraged you to start up your own emergency fund if you have yet to do so already.
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