Do you handle your finances well? If you’re not, there is a huge chance that you’re going to reach financial crisis at some point in your life.
Suffering from a financial crisis sucks because you will be scrambling to get money just to pay for things and that can be pretty scary for a lot of people.
In order for you to combat it, you need to establish an emergency fund. The said fund is a special account wherein you invest some cash into it for use in emergency situations.
If you’re not convinced on the idea of having an emergency fund, here are the 6 reasons why you really need to have one:
1. Job Loss
Losing your main job is devastating. And, with how things are going on and depending on what your job is, you could lose it sooner than you think.
There are certain jobs wherein you’re just not secured- that you can lose it at any time. I remember that there was this gaming company that pretty much axed the majority of their developers because the game they’ve recently released didn’t gain enough traction.
It could happen to you as well. This is why having an emergency fund is beneficial. If you lose your job at an inopportune time, at least you will have something that you can withdraw money from.
2. Bigger-than-expected Tax Bill
All of us are required to pay taxes; it is just our obligation. Even if you religiously pay your taxes every year, there are cases wherein you will have to pay more than you’ve expected.
In such circumstances, an emergency fund can help you pay the taxes that you didn’t expect.
3. Car Repairs
If you’ve used your vehicle for quite some time, it might need some maintenance. After all, it is one of your properties that need some inspecting and possibly replacing of parts from time to time.
Depending on what needs to be replaced or even repaired, you will need some cash to pay for it. There are certainly some financial options like bank loans or cash advance online that can help.
But although you can employ such schemes, it is still a great option for you to tap into an account like your emergency fund to pay for your car repairs.
4. Medical Emergency
If there is one thing that drains our bank accounts dry, it would be medical emergencies. Procedures and treatments can cost a lot of money.
The problem arises when you do not have an emergency fund. This is because you will have to get the money from your main account and your account might not have enough left in it since emergencies happen at times when you least expect it.
An Emergency fund is usually a separate account wherein you put money into it. That means that it is only best used in such situations. This is ideal because we sometimes forget to save and having a special account for emergencies is a great way for you to somehow force yourself to save.
5. Unanticipated Travel
Most families become independent and they get a house of their own, away from their parents. What if there is an emergency in the family and you absolutely need to go there? Where will you get the funds necessary to travel to your parent’s place?
You might have probably guessed it by now- nothing else than your special fund. This special fund can help you in times such as these because as I’ve mentioned earlier, emergencies can happen at inopportune times.
6. Home Repairs
Just like your car, your home might need some repair and maintenance work from time to time. Your house might need some repainting or you may have to repair your roof because of rust or damage.
Whatever your house needs, tapping into your emergency fund away from your main savings account can help you cover the costs.
Let’s face it, there are just some things in our life that we least expect to happen. Things such as a sudden job loss, unanticipated travels, and even home and car repairs will need some money.
Having a separate account that has more than enough money in it can help you cover the costs and it will give you a peace of mind, especially if you’re confronted with stressful situations that will involve some cash.
- How to Manage Home Business Cash Flow Effectively
- 8 Lessons in Managing Large Accounts
- Merchant Account: How to Accept Credit Card Payments Online
- Unique Business Ideas Focusing on the Increasing Terror Threats and Other Emergencies
- HDFC Life Pro-growth Plus Plan Features and Benefits