You are young and energetic, still have all the energy needed in the world to do whatever you want and to work for a salary and never thought of emergency fund. You have a job which pays you enough for your lifestyle and you’d be thinking,
Why the hell do I need to have an emergency fund or emergency money anyway?
Worst if you have never thought of having an emergency fund or you never contribute into your emergency fund. None! Nadaa! All the money you receive as your salary at the end of the month will be utilize fully to pay for your lifestyle, your needs.
Or maybe you have been investing your money in stock market and you’ve been thinking that you are invincible because you have a salary and you are an investor. But you have to realize that it is vital for you to contribute monthly not only to your saving account but also in an emergency fund.
I do have this thinking when I was younger, that I think I will work and have the salary and live. My life will be just like that. Until a day when my father passed away and I needed to get back Home. Worst is that, I stayed far away from my family and getting back hometown require a bit of money which I don’t have enough, because I will finish every penny of my salary until next salary.
With what Happen, I started accumulating debt. A lot’s of things happened and all needed money which I don’t have. Next thing I know, I’am in lot’s of debt. So I started to realize that, even I’m working with salary every month, I must have an Emergency fund. I have to contribute to not only my saving or investment account but to my emergency fund as well.
Here I share with you 5 reasons why you must start or must have an emergency fund.
1. You Have a Cushion to Fallback When Emergency Happen
Yes! You read that! that is the reason it is called an emergency fund. It’s to be used when you have an emergency. When you car suddenly broke down and needed major repair or your home needed a major repair. Without an emergency fund, you wont be able to fund the repair and next thing you know, you’ll start accumulating debt.
2. You Try to Pay off Debt
It’s easier to fallback to debt if you don’t have an emergency fund to fallback when the unexpected strike. Instead of getting back to accumulating debt, you can focus on paying off debt. Your emergency fund will help you to cover financial needs which not included in your budget or when unexpected events happen.
3. When You only Have 1 Income
If you are depending on 1 sole income, imagine what happen when suddenly that company you work for goes burst financially and needed to close shop or retrench workers. Have you ever thought of securing your life financially before Coronavirus happen? You know what happen on the whole world when it happens. Unemployment numbers rising, so how do you think they are surviving? I think the stimulus check or government help wont enough.
Or have you ever thought what happen if your business suddenly collapse?
4. If You Are Self Employed
Yes! If you are self employed, best if you create an emergency fund. Why you might ask?
Have you thought of the possibilities that suddenly your business does not go so well. Its difficult to get a client or there are competitor who are better in the offering?
Yes! You will fight back but in the meantime, how are you going to survive without an income if you have an emergency fund?
Think of your emergency fund as your insurance policy when you needed something which out of you budget and you’ll thank yourself later.