Many people think that there is no need to build an emergency fund when they have a steady job and everything is going right, but the thing is, circumstances can change in an instant and anyone can find themselves in financial difficulties.
Building an emergency fund is something everyone can do if they have anything left to spare after paying for the essentials each month. It is a buffer that can get you through tough times with more ease and a lot less stress, financially speaking at least.
If you aren’t, however, sold on the idea of an emergency fund, check out these very good reasons why you should be building one in 2022:
The COVID-19 pandemic has caused chaos in our personal life with numerous restrictions being enforced upon us, but it has caused even more chaos in the financial world what many people losing their jobs, being forced to work shorter hours, or seeing businesses they spend their whole lives building decimated.
This economic uncertainty is likely to stretch well into 2022, which means more people could find themselves with a smaller paycheck or out of work completely at some point. Having an emergency fund should this happen, will help you to get by and pay the bills for a period until you can find new employment, which means you will have a lot more breathing space to really focus on finding employment.
The coronavirus pandemic has also shown us how precarious our health can be, not to mention how expensive treating illness can be. In the U.S., you only have to have one trip to the emergency room and your finances could be seriously impacted, if you need a long stay or expensive treatment, you could be financially crippled. Having an emergency fund is just one thing that can mitigate against this along with, say, getting compensation for your injury with the help of a 18-Wheeler accident lawyer after an auto incident, having a decent health insurance policy, and doing everything you can to stay healthy, amongst other things.
Your health is the most important thing you have, and although an emergency fund isn’t the whole answer when it comes to paying for healthcare, it will certainly give you a buffer and remove some of the financial strain should you need medical treatment, for sure.
It would be nice if the things we own would last a lifetime, but these days, that is rarely the case and there will come a time when everything from the car to your washing machine breaks down unexpectedly. If this was to happen and you did not have an emergency fund, you might have to put the repair costs on a credit card or take out a loan, which will obviously be more expensive due to interest costs. Whereas, if you do have an emergency fund in place, you can use that to immediately repair or replace what is broken with no inconvenience to your life and no adding to your debt burden, it really is that simple.
If you have a pet such as a cat or dog, it is a really smart idea to take out a pet insurance policy because the cost of emergency veterinary treatment can be just as expensive as a treatment for a human being.
However, most pet insurance policies do not cover every eventuality, which means if your animal gets sick, you may well need to find a sum of money to take care of them, if you have an emergency fund in place, you will not need to worry about this and you will not be forced to make a tough decision about whether to treat your animal or have them put to sleep. If you are a pet owner, that choice is likely to be your worst nightmare, and it can be so easily avoided in many cases, by simply having an emergency fund in place.
Unexpected Life Events
From unexpected bereavements to weddings, from sick days to your child’s sports uniform, there are so many unexpected life events and experiences that can potentially break your budget, but if you have an emergency fund in place, you can have the peace of mind that comes with knowing you have them covered.
As you can see, there are so many good reasons to build an emergency fund in 2022 that you would be foolish not to do so. Your personal finances are important and an emergency fund will make your financial position far stronger, so what are you waiting for?