In today’s day and age it is extremely important to have funds which can be be liquidated and acquired suddenly, at hours or a day’s notice. Life is very unpredictable and money is an essential requirement for all things that make life better. For the same, emergency funds are very important for any kind of situation that may arise out of the blue in your life. While you may feel inclined to spend the money that you save, you yourself will thank your emergency fund when it helps you in your time of need.
Here are some situations that will really make life easy for you if you have saved up an emergency fund.
- Sudden Loss of Job
If the sole bread earner of the family, whether it is you or some other member of the family, loses his/ her job, having an emergency fund will get your family through few months of financial expenses while you’re on the look out for a new job. Emergency fund will ensure that the sudden loss of job doesn’t leave you financially paralysed. It will also ensure that you don’t have to ask for a loan from someone else to manage your monthly expenses.
- Medical Emergency
Although medical problems are usually covered by medical insurance. However, just in case your insurance doesn’t cover a rare disease or a particular kind of medical problem that you or your family member may be suffering from, your emergency fund will ensure that you can start with the treatment for the time being. Meanwhile you can look for alternate options to fund the entire medical treatment.
- Less Burden of Loan
Whether it’s a personal loan from the bank or a loan from a friend or family member, a loan means an added financial responsibility of paying back the loan on time. If you have saved up and maintained an emergency fund, then you will never have to apply for a loan in your bank or ask for one from your family members or friends. An emergency fund saves you from getting caught in the vicious cycle of debt.
- Lifestyle Changes
You may want to change your diet and switch to healthier options which can cost more than your current cost of grocery or living expenses. Having an emergency fund will let you comfortably choose and make lifestyle changes without worrying about any added expenses.
- Job Change or House Renovations
Whether you need to change your job and move to a new city or renovate your home, it always costs more than you can manage to take out from your monthly income. If you have have been saving up and depositing money every month in your emergency fund, then the process of shifting or renovating homes will become much easier for you. You will be able to spend money on renovations and other expenses without compromising on your, otherwise, daily expenses.
- Motor Vehicle Expenses
There can be times when you have to change a car part or get a new gear for your motorcycle, and motor vehicle parts are very expensive and can put a strain on your monthly income. If you have an emergency fund, you’ll be able to quickly source out money for the car part without having to cut down or withdraw a chunk of money from your monthly salary.
- Spontaneous Plans
An impromptu travel plan or visiting your grandmother in another city or just wanting to take a vacation to blow off some steam will cost money. You may not want to spend your entire month’s earning but you also don’t want to stop yourself from a well deserved break. This is where your emergency fund will come in handy and make itself useful by supporting your spontaneous plans.
- For Other’s Emergencies
You may have to play the role of lending a friend or family member some money in case of their emergencies. So an emergency fund will make it possible for you to say yes to a friend in need without it affecting your family’s financial needs.
- Business and Education
If you want to start your own business, an emergency fund will be extremely useful to get you started. You can use your saved up money for tricky business situations and payments till the time you’re not making profits in your business.
An emergency fund can also help you continue your education or take some extra classes if you want to enhance your skills and knowledge.
Emergencies and the kind of emergencies cannot be predicted so it becomes all the more important to have some money in hand that can help you get out of emergency situations smoothly and easily. It is also important to ensure that your source of emergency money be easily liquidated in time of need.
Author Bio : Renier Botha is the owner of Finance 27, one of South Africa’s leading online payday loans companies who offer some of the fairest rates in the market. He has a wealth of experience working in finance and as managing director of a hugely successful nationwide business.