Well, as the name suggests, an emergency fund is for the unforeseen emergencies of life. And if you think that you don’t need one, think again! Besides, your Credit Card won’t be able to save always.
Life’s unpredictable and it’s better to be prepared to face the unexpected curve balls that life throws at you. That’s why financial experts across the world insist on saving up for the rainy days. An ideal emergency fund or contingency fund should consist of at least three to six months of living expenses. Tuck away this amount in a Savings Account or a Liquid Fund and you’re sorted to face whatever life throws at you.
Additional Reading: How To Build An Emergency Fund
If you still aren’t convinced about the importance of an emergency fund, we’ve compiled a list of scenarios where such a fund could save you from a financial disaster.
You Lost Your Job
Losing your job can be an extremely traumatic experience. Add to that the money woes you’ll face when you lose the steady monthly income and you’ll find yourself in a hopeless situation. Having an emergency fund will help you tide over this situation with ease.
Today, you may be in the pink of health. Tomorrow, you can be diagnosed with a debilitating illness. What will you do when your illness prevents you from working? How will you support yourself and your family? A contingency fund can help you get through this phase. Start saving already!
Additional Reading: How To Maintain Your Car Without Spending A Dime
The Unexpected Pregnancy
Sometimes it happens! And the whole pre- and post-pregnancy phase involves a lot of money. Having enough backup money is the only way to beat the expenses that come attached with bearing a child.
Sometimes those close to you may need your help financially. There can be a medical emergency in the family or a death, maybe. In these situations, your close family members will require your help with the expenses. What will you do if you don’t have any savings at hand? Think about it!
Raising kids isn’t child’s play. It requires a lot of effort and, well, money. What if your child requires crucial medical treatment? Of course, your Health Insurance will help cover expenses, but there will still need enough in your pocket to cater to other out-of-the-pocket expenses, right? A contingency fund can help you stay afloat in such a situation.
Car accidents can wreck you and your finances brutally. Even though Car Insurance can help, it may not be adequate. Since no one ever plans for it, you’ll find yourself in a mess especially if the accident leaves you bedridden and incapable of working for months.
Depression is real! Being depressed can affect your work life and your ability to earn. Besides, you’ll need a helping hand to break out of the phase. With an Emergency Fund, you can keep the money worries at bay at least.
The Expensive Shift
Whether you got kicked out of your present apartment or you’re relocating to another place for job reasons, shifting apartments or relocating to another city isn’t a cheap affair. Build an emergency fund and you’ll at least have a savings buffer to fall back on.
The Messy Relationship
Whether you’re living with your spouse or your live-in partner, certain situations, can push you towards moving out. But where will you go if you don’t have any money save up? Do you need another reason to start an emergency fund?
The Dream Job
Finally, you have discovered your dream job. But it demands a cut in your pay scale. Well, you wouldn’t have to worry about it if you have a contingency fund in place. It’ll help you with your expenses till you rebuild your income.
Don’t you think that having an emergency fund is a good idea? Well, what’re you waiting for? Start one now and you’ll be glad you did!