If you ask any financial experts what the two most important things you can do to secure your financial security are today, chances are they will tell you that clearing your debts and starting an emergency fund are the things that will help you the most. It’s obvious how clearing your debts would help, so most people are onboard with that but when it comes to the emergency fund, many people are less convinced. This is such as shame because having an emergency fund really is vital, for so many reasons…
Life is Unpredictable
The main reason why an emergency fund is so essential to us all is the fact that life is very unpredictable. It doesn’t matter how many plans we make, there is always a spanner waiting to be thrown in the works and although we usually avoid that spanner successfully, sometimes we don’t and when we don’t and the problem we’re facing is set to cost us money, having an emergency fund is vital. Why? Because it means that we don’t have to resort to more desperate measures like payday loans and credit cards to get us over the hump.
Still not convinced? Here are just a few situations when an emergency fund would come in handy:
Injury and Illness
We might be lucky enough to have the NHS in this country, but that doesn’t mean injuries and illnesses are cost-free. If you have to take a long time off work, you probably won’t be bringing in as much money as you’re used to – you can see information about Statutory Sick Pay at https://www.gov.uk/employers-sick-pay/entitlement – and that could be a problem unless you have an emergency fund to make up the shortfall for a few months until you’re back on your feet that is. Makes perfect sense right?
If you have a pet, it’s a good idea to take out an insurance policy to cover them if they are sick and injured, but even then, you may be expected to pay an excess or have your application turned down for some reason. What do you do then? Take out a loan you can’t afford, and end up ruining your credit score? Sure, the companies at http://repair.credit/best-credit-repair-companies/ can help you when that happens, but life would, I’m sure you’ll agree, be a whole lot easier when you have an emergency fund you can rely on, right? Paying with cash you’ve earned is always the smart thing to do if you’re able, it really is.
If your roof is leaking and there’s subsidence in the basement, be pretty glad you have an emergency fund to set the ball rolling on those essential repairs. If you don’t have anything to fall back on, you’ll either have to leave those issues which will pretty much guarantee they’ll get worse and cost your more in the end, or you’ll have to remortgage, take out a loan or borrow from family members and none of those are good positions to be in. No, what you need is an emergency fund, so start saving now.
If you lose your job, having an emergency fund that can top up your income and keep you going for a bit longer at least covering your major bills, will be a real boon.
An emergency fund means more security – it really is that simple.