You have probably heard that having an emergency fund is important, and it’s true. Pre-planning is especially important in today’s society because you can never expect things to go as planned. Emergency funds give you peace of mind on a rainy day.
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First, you should create an emergency fund because unexpected events may happen. Putting aside money will save you in the long run when you run into these unexpected events that otherwise would leave you tight on money. These events may include having your car towed, being in and out of the hospital, getting into a car accident or anything that may involve unexpected and urgent bills. When you have an emergency fund, you can tap into that fund to pay for these expenses instead of using your “spending” money and worrying about how you’re going to manage until next payday.
An emergency fund can also come in handy if you missed a payment on a credit card or another overdue bill. Sometimes, life gets busy and due dates slip your mind. Typically, when you miss a payment, depending on the company, they may add a late fee on top of your missed payment. You can cover those fees with your emergency funds without tapping into your “spending” money.
Having an emergency fund can also improve your mental health. When you feel that you are financially stable or that you have an income to rely on in case anything were to happen, the sense of control over your life tends to help you feel better. Stressing out because of money issues takes a server toll on your health. If you are able to set up an emergency fund, it can lift the money stressors off your shoulders.
Emergency funds are especially recommended if you have one source of income. If you have one source of income, this emergency fund will be beneficial if you start to lose hours from your current job. It’ll be beneficial if something unexpected happens and you lose your job. It’ll help to keep you on your feet while you apply and look for other jobs in the meantime.
Finally, things happen where you may have to unexpectedly travel. This can be a death in the family from across the country or a court date that you couldn’t fight to have in your state. Having this emergency fund can cover these travel expenses. It may also prevent you from having to use your credit card and paying interest on the purchase.
If you haven’t started creating an emergency fund yet, you should consider starting sooner rather than later. You can never predict how things are going to happen nor are you able to make everything go as planned. As much as it’s nice to hope things go as planned, there are always some unforeseeable events and an emergency fund will come in handy in the long run.
My name is Linda Tran. I'm 24 years old from Boston and I'm majoring in Marketing with a concentration in Social Media at the Southern New Hampshire University. A fun fact about me is that I learned coding and HTML at the age of 11.