You keep hearing it from all over the place, “you need an emergency fund.” You know it’s probably true but you figure you’ll get around to it…eventually. Besides, you have other things you need to pay for and save for right now. Why save now for what might happen? There are lots of reason why you need an emergency fund today, and not some time in the future.
1- Emergencies happen at any time
It’s called an emergency fund for a reason. You never know when an emergency may happen. It may be an ER visit, a broken appliance, or a car that needs towed. Whatever it is, it is impossible to predict. If you are not prepared for them you may end up in a financial crisis.
2- Emergency funds prevent more debt
If you do not save for emergencies you are most likely in some form of debt. If an emergency strikes when you don’t have an emergency fund set up, you will most likely end up in more debt. Whether it’s credit card or borrowing from a family member, it’s still debt. Having money set aside just for emergencies help prevent getting into more debt, thereby helping you get out of debt!
3- Having an emergency fund allow you to save for other things
The thing about emergency funds is that they actually free up more money. Once you have $1,000 (or whatever amount you decide on) set aside for emergencies, you are able to use your money for other things. For me, some of it goes to debt repayment and some goes to saving for other things. I know that my cars will need repair and my house will need work and that eventually I’ll need to replace a car. Having an emergency fund means that I can put aside money for these other things and then not have to touch it when an emergency comes up.
4- Emergency funds give a peace of mind
There’s just something about knowing there is money in the bank if something happens. It just seems to bring down stress levels. When our washing machine broke suddenly, sure I was upset, but I also knew that I had the money available to replace it. It was not a source of great stress like it would have been previous to having an emergency fund. Why wait to start having less stress?
With all these benefits of an emergency fund, why put it off? Start saving towards it today! There are many ways to you start saving. Check out my tips for starting a money saving plan. Every $5-10 adds up, quicker than you’d think!