You do not want to spend most of your time contemplating bad scenarios. However, if emergencies occur and you haven’t prepared yourself financially, the fallout is going to be super stressful with serious financial repercussions.
This is why you need to plan and set aside some emergency savings.
When it comes to emergency savings, here’s what you need to know.
#1 Job Loss
Protecting yourself is one of the reasons you need to have emergency savings.
When people lose their jobs unexpectedly, they are often left without a plan of what to do next. However, with your emergency fund, you can always have some cash to settle your bills including your rent and utilities.
Without this, it would not be possible to make ends meet. In the event of a job loss, your savings will give you peace of mind as you plan what your next career is going to be.
#2 Medical and Dental Bills
What can go wrong if you are young and healthy? So much, actually. From the unexpected cavities or illnesses to major accidents, emergencies are inevitable.
That is why it is always advisable to have some emergency savings with you. Even with dental or medical insurance, you are not guaranteed that these will cater to all your emergency situations.
Apart from the deductibles, there are medical procedures that your insurance may not cover. Alternatively, your cover can max out, and you are left without a plan.
#3 Contractor or Self-employed
If you are an independent contractor or self-employed, then you cannot claim unemployment benefits from your work. In such a case, it’s vital to have some emergency fund saved up.
Additionally, it is essential to have various sources of cash to cater for cases of emergencies when your savings run dry. If that happens, online installment loans can be beneficial.
However, you need to remember that these types of loans should be taken out only for emergencies. What’s more, these loans have a varying rate of interest. The high-interest loans make sure if you can pay back the loan on time.
#4 A Single Income Source
If you have a single source of income, then it is advisable to have substantial emergency savings. That way, you’ll be in a position to get through situations such as illnesses that prevent you from going to work.
If you are the sole provider for your family, you need to work towards your emergency savings. If you are from settling a debt, you need to build on your savings as fast as possible.
#5 Immediate need to Move
Maybe it’s your new job or a change in a scenario that has made you move. Irrespective of what the reasons for moving may be, it is always important to be prepared.
That’s when your emergency funds become crucial. Without your savings, it can be challenging to relocate during an emergency.
There are numerous benefits to having some emergency funds saved up. These funds can help you remain focused in case of stressful events such as the loss of a job. Make sure your emergency fund is included in your budget until it has been funded fully.
What are you doing to build up your emergency fund?