Why Emergency Fund?
Most people get into trouble when it comes to the very beginning and end of the month. Because at that time most of the expenses related to monthly bills like electricity, gas or water bills to housekeeper’s salary fall together.
Why Emergency Fund?
Having an emergency fund is very helpful during these times. How much money is best to have in an emergency fund depends on many factors. But according to experts, at least 3 to 6 months of expenses should be kept in the emergency fund.
1. Loan repayment time
Everything is going on normally in your life, suddenly someone in the family has to undergo a minor operation on an urgent basis. Or the car suddenly broke down without any notice. Whenever you are in trouble financially, you usually have to borrow from someone. And if you are in debt to someone else at the same time, the pressure increases even more. Having an emergency fund allows you to spend from the fund during those times. This will keep your debt burden from increasing. Keep depositing in the fund until you reach the amount you have set aside for the emergency fund.
2. When budgeting monthly expenses
When budgeting for monthly expenses, there are many expenses that you may overlook. If you set aside money for an emergency fund then you won’t have to face the problem during the critical times of the month. Additional expenses can be spent from the fund. After a few months of budgeting like this, you will see your unexpected expenses decrease.
3. If there is only one source of income
If you have only one source of income, then having an emergency fund is essential for you. If you have to take a long leave of absence from work due to illness or some other problem, you can rest assured about the family expenses for a few months. You need to have an emergency fund to last at least one year.
4. If you do contractual work without working under someone
If you are self-employed or a contract worker, having an emergency fund is even more important for you. Again you can work in an organization from which pension is not paid after retirement. In that case you need to have an emergency fund. If you work on a contract basis, start saving more for an emergency fund before the contract ends. If you are a businessman, you can create an emergency fund for those months when business is down.
5. If in own house or flat
Even if there is no rent in the house, it costs some money every month to keep the house in order. Even with small expenses in mind, appliances like AC, TV or oven can suddenly break down completely. Keep emergency funds in mind for such needs.
6. If away from family
Traveling to where your family lives may cost quite a bit of money. In that case, you may need money to visit a family member on an urgent basis at any time. Also, if someone suddenly falls ill or an accident or danger occurs, keep an emergency fund to be sure of travel expenses.
7. If you have health problems
If you have an illness that may require emergency treatment at any time, the emergency fund will help you. Even if you fall ill suddenly, you can pay from doctor’s visits to test fees from this fund. Even if someone in the family is sick, an emergency fund will be very useful for you.
8. If you want to achieve your goals
If you want to save money to buy your own flat or start a business, then it is not right to spend from the accumulated money. If you need money suddenly, you can spend from the emergency fund instead of the saved money. By doing this, your work money will also be spent and you will get the necessary money at hand when needed. It may seem difficult to store in two places at once, but with a little understanding, it will not become an additional stress.
