Having an emergency fund is an important part of being a responsible adult. You never know when unforeseen circumstances could lead to a significant expense. Rather than relying on your credit cards, it’s important that you have a fund dedicated entirely to covering emergency situations.
However, some people may not believe that an emergency could ever happen to them. The truth is that it happens more often than you think. Here are some of the most likely reasons why you may need to tap into an emergency fund.
Home Repairs and Upgrades
As a homeowner, there are always things that can come up. You may need to replace or upgrade things in and around your house. As the years go by, things start to wear out.
Whether you need to install a fire alarm, or completely replace your roof, there are all sorts of things that can arise from mild to more serious.
It’s important that you anticipate these costs as a homeowner. Otherwise, you could find yourself in for a big surprise when a big ticket expense pops up that you aren’t prepared for. All it takes is one big storm for your basement to flood and you could find yourself with thousands of dollars in damage that insurance doesn’t fully cover.
As much as you might like to think that you’re irreplaceable at your job, the truth is you are much more replaceable than you probably think. People lose their jobs every day, and as such, they can find themselves with no income. If this were to happen to you, would you be able to pay your rent? It’s important that you have enough money saved up to be able to cover all of your living expenses for at least three months in the event that you lost your job.
While this may seem like a significant amount, that’s the average amount of time it takes for someone to find a new job. Having the peace of mind of knowing that you can cover all of your bills in the absence of a paycheck is important—especially if you have a family to look after.
Family Member Loss
Although we never want to believe it could happen, it does. Many people find themselves mourning the loss of a loved one or spouse suddenly leaving them scrambling to continue on without them. Not only can it involve having to take on all the bills by yourself, but it can also involve emergency travel and funeral costs. Having emergency funds on hand for a stressful moment like the loss of a loved one can take the pressure off of finances so you can focus on grieving.