Well, no one really likes to think about the bad days that can happen to them in future life. But, it is important to realise the fact that we are not immune to crisis. An emergency situation can hit at any stage of your life, and if you are not prepared, it can have an adverse effect on you emotionally as well as financially. You might face some dire financial consequences that might affect your professional and personal life both. Now, this is why having an emergency fund become so crucial.
Keeping money in hand for unexpected events is very necessary. It will provide you with much needed financial security. So, when any an unexpected situation occurs, you will know how to deal with it in the right way. Also, having an emergency fund will allow you to look ahead in life and plan your future goals. There are many areas or situations where having an emergency savings can help you. In this blog, we will be discussing some of the major reasons where it can prove to be of great help. Now, let us get started.
- Sudden Job Loss
One of the biggest reasons why you need to have emergency savings is when you lose your job. Things can get really ugly during the time of redundancy, especially when you don’t have any savings to fall back on. You will have to ensure that all your bills, credit cards and other debts repayments are done on time. Apart from that, you could even struggle in managing your daily expenses like foods, utilities and other basic necessities. Thus, an emergency fund will help you take care of all such expenses provided that you have saved enough. Try to keep at least 3 –6 months of your salary in your emergency saving account. This is the ideal amount that you should have in your account minimum.
- Medical Bills
Today, you might be young and healthy but as time goes on, you will grow older and this physically weaker. There are possibilities of various medical conditions like sickness, disease, an accident. All such situations can throw a massive medical expense in your face. So, an emergency fund will ensure that you are financially ready to handle such situations in an organised way. You might be thinking that “wouldn’t be it better to go for medical insurance”. Even, medical insurance won’t guarantee that all your expenses will be covered. You must have additional cash in your hand as well so that if your insurance couldn’t cover all the expenses, you will still be able to manage it.
- Auto repair
No machine is 100 % efficient and at times, your car will too show signs of damage or might even break down all of a sudden. In any of the case, having money in your hand can be really helpful. If you live in a place where you cannot access public transportation and use your personal car then certain damage on your precious vehicle can really problematic. There are many problems in the car that cannot be insured by any insurance. You will have to look all by yourself to fix such damages. One strong reason to have an emergency fund is to cover the cost of car these damages.
- Additional tax bill
You were all set that you have to pay a certain amount of tax, but you receive far bigger bills than you had comprehended. To your surprise, the tax bill you have to pay is something you have not calculated at all. Now, there are no escaping tax bills as these are mandatory. So, emergency savings in your bank account will help you manage the cost without any kind of inconvenience. However, if you don’t have enough funds or you have barely started saving money, then you will have an option of emergency loans in the UK from British-lenders.uk. Look for a reliable lender who offers such loan products, but do complete research on the loan before you apply.
- Unplanned travel
A death in the family or any major illness can happen and as being the part of the family, it is your sole responsibility to be with them at such time. So, such situations can make you purchase the last minute flight tickets whose prices can be really expensive. Using your credit card means dealing with a massive bill after returning. But, all this can be avoided if you already have an emergency fund with you. Also, you could help your family members who might be struggling financially after a big loss in the family.
So, these were the major situations that can occur at any stage of your life and why you need emergency savings. It will help you to stay balanced and will help you in reaching your further goals in life without any interruption.
Description: Emergency savings are really important to ensure that you are financially capable to handle any unexpected events of your life.