When life hits you hard one of your first considerations will more than likely be how it will affect you financially. Having an emergency fund is the best way to take a little bit of stress out of unexpected problems. It's a good idea to have at least 3-6 months worth of your living costs set aside, but remember that with an emergency fund, the more you have, the better off you'll be. Have you been putting off building up this important financial security blanket? Here are a few of the reasons why having an emergency fund is such a smart idea:
Less Stress When You're Between Jobs
Have you ever been laid off? Or have you ever just been so fed up with your job that you quit without thinking of the repercussions? Both of these situations are much less stressful when you have an emergency fund. If you have saved enough money to be able to properly function while you're between jobs then you know you'll have enough time to find the next job that's the best fit for you before you have to worry about how you'll pay your bills.
Home/Car Maintenance Issues
We all know that the unexpected often happens in life, and sometimes the unexpected can end up costing you a lot of money. If your car suddenly breaks down or any of your home appliances suddenly stop working you're in for a costly fix. Having an emergency fund that you can dip into to help you fix these issues means you won't be scrambling to find the money from somewhere. Even after you've gotten your car running again or your refrigerator replaced you'll still have financial security.
In Case of Illness
An unexpected illness affects you financially in two significant ways: you won't be able to work or have income for a time, and you'll find yourself with some expensive medical bills. Having an emergency fund lessens the blow as you can be sure your immediate expenses will be taken care of for a time. When you're really sick the last thing you want to have to stress about is money.
Prevents Debt
One of the top reasons to have an emergency fund is so that when something goes wrong you don't find yourself having to take on an enormous amount of debt. Having to tap other resources for money can put a strain on your financial life for years to come. Being able to rely on money you've set aside will help you maintain the financial security that you've worked hard to build.