What it’s a car repair, an illness or a sudden and unexpected bout of unemployment, sometimes life can catch you off guard and leave you in dire financial straits.
When the unexpected happens, it’s time to dip into your emergency fund to cover life’s ups and downs.
While it would be nice for an emergency fund to have at least 3 months of your living expenses, the reality is that most of us can’t save that much.
Whatever you can save is better than nothing, so even if you can’t sock away a lot of cash, every little bit helps.
Read on for some surprises that may inspire you to finally start the emergency fund you’ve been thinking about.
Whether it’s caused by a lay off or a sudden desire to quit, having an emergency fund can make a job loss less scary. The temporary income replacement will help cover basics while you hunt for a new job.
Health insurance is covering less and less of medical expenses and an unexpected illness or emergency can still put you into financial ruin. Having an emergency fund can make planning for the unexpected easier, relieving stress that many families feel whenever someone falls down or starts getting sick.
Cost Of Living Increases
With the fluctuating economy, bills and housing costs are skyrocketing. If you have an emergency fund to cover the cost of living increases that rise faster than your paycheck, you’ll have plenty of money set aside to cover bills when the price of oil starts to rise or when you’re suddenly spending more on electricity.
To cover the cost of living increases, you’ll need enough money in your bank account so you can write the checks to cover these added expenses.
If you work for a company with more than one location, there’s always a chance you can be asked to relocate at the last minute. Not all companies offer moving reimbursement, so having a savings account that you can dip into to cover the cost of sudden moves is a must.
You probably need to drive to get to work and if it hat’s the case, having a fund to cover car repairs can be invaluable. Car repair funds will allow you to fix whatever is wrong with your vehicle so you can get back on the road quickly. That means you’ll be back to getting groceries, driving to work and taking care of business in no time.
It seems like when it rains it pours, so it’s not uncommon to have to battle several household repairs at once. When things start going wrong at home you can either turn to your insurance or you can dip into your emergency fund. Turning to insurance may include paying a deductible, which could require your emergency fund as well.
Even though you’re not planning on visiting your grandmother on the other side of the country, a death can mean a necessary ride in an airplane or an extended drive. Instead of worrying about travel costs, dip into your emergency fund and focus on what really matters.