If you are trying to become financially free, the first thing that you will need to do is create an emergency fund in your account. An emergency fund is there as a buffer when life happens and an unexpected cost comes up, as you can pay this quickly and don’t need to stress, worry or put yourself into debt. Here, we are taking you through our top reasons as to why we think you need to build yourself an emergency fund.
You’re Getting Out of Debt
Even if you are already in debt, it is vital that you stop adding to this debt and create even just a small emergency fund that will see you through any unexpected costs arising. This could be medical costs, your car breaking down or something else that you have not budgeted for. An emergency fund will allow you to handle this stressful situation and you will be able to stay focused on getting yourself out of debt.
It’s Only Your Income
If it is only your income or simply one income coming into the household, then an emergency fund is absolutely crucial. This emergency fund will be there should that person lose their job or if they can no longer work due to illness. If you are single and the sole income provider then you should try to build up around 6 months to a 1 year’s worth of expenses. Setting up a savings account for your emergency fund is wise as it might help you fight the urge to spend it. One of the most popular options available is through BB&T whose eSavings account requires no minimum balance and has unlimited deposits, withdrawals and transfers.
If You Own A Home
If you own a home, an emergency fund is crucial as you will be the one responsible for all repairs and upkeep. There will always be unexpected costs that arise such as a plumbing or heating repair and your emergency fund will allow you to handle these costs. This makes owning a home a much more enjoyable experience and not as stressful! Try to save up for expenses before they occur and plan this into your budget.
You Don’t Live Near Family
Travelling back home can be extremely expensive, especially when you do not live near your family. What’s more, if you need to be back home for an emergency, the cost of travel will be even more expensive. An emergency fund is there for when these types of things happen as it can cover the cost of a last-minute ticket home, medical emergencies or even a funeral.
You Have Medical Issues
Medical insurance is expensive and if you have an ongoing medical condition, then you will know how quickly the extra costs can add up. Not only that, if you use up your sick days then you may also have to take days off with no pay. An emergency fund is there to help you deal with these smaller costs and make it easier to get through challenging time.
Saving for an emergency fund is challenging, but you will be well rewarded with the complete peace of mind that you will have as you then work towards your other financial goals.