Life often takes unexpected twists and turns. You may find yourself getting hit with the death of a loved one, a serious illness, or even the loss of a job. With the unexpected expenses mounting, we search for ways and means to make ends meet. The stress of trying to figure it out can be avoided if you plan for the unexpected with an emergency fund. The extra money will help you navigate through tough times while maintaining your standard of living.
Loss of Employment
No matter how good of an employee you are, you can face the challenge of job loss. The reason for the loss could be anything from the company going out of business to management changeover or reorganization. You may not qualify for unemployment benefits, or there simply may not be enough resources to cover your monthly expenses. Until you find another job, you will need extra cash on hand to supplement your income deficit.
Home Repairs
Natural disasters like floods, fires, and tornadoes can cause unimaginable property damage and may require a sizeable deductible. Even something as simple as the breakdown of a home appliance can prove to be costly. Without an emergency fund, it may be difficult to cover the unexpected expense.
Auto Repairs
Auto repairs almost never come cheap. And if it’s a major problem, the bills can greatly exceed your budget. The extra expense can throw your household budget out of alignment. Apart from that, transportation can be a hassle while your car is getting repaired, which may even adversely affect your job.
Loss of a Loved One
The death of a loved one is typically a sudden occurrence. Making funeral arrangements can definitely take a toll on you emotionally as well as financially. Even where pets are concerned, proper disposal of the body can be expensive. Having an emergency fund can ease the burden of how one’s funeral arrangements will be funded.
Doctor Visits and Hospitalization
Chronic health conditions, aging, pregnancies, and accidents can lead to frequent visits to the doctor or even hospitalization. Apart from paying for hospital care, there may also be the need for continued use of certain medications. Sometimes, insurance may not be enough to cover all of the expenses. When your financial well-being is threatened, it causes a great deal of stress. Having an emergency fund helps you to be prepared and to avert such stress.
How Do You Get Started with an Emergency Fund?
Creating an emergency fund is not as difficult as it seems. It’s just a matter of putting away a designated sum of money each month. For example, if your initial goal is to save $1,000 for an emergency fund, then you may want to set aside $100 a month for the next ten months. Start small with a cookie jar and move on to a bank account when you have a substantial sum saved. Make a habit of it; be disciplined in your savings goals. As you’re saving, don’t be tempted to spend the money on sundry expenses. Saving is so very beneficial and will better prepare you for any unexpected situations life has to throw your way.