At times it is necessary for you to have some savings at your disposal. If you have not set up any emergency fund and suddenly some unforeseen events take place then you will forcibly have to rely on the credit cards, tap the retirement account of yours or take a loan. As a result, you may end up drowning in some kind of debt or may not have enough money for funding your retirement. Therefore, it is advisable to consider below mentioned reasons that emphasize the necessity of having your emergency fund set up right away.
It is normally amongst the basic reasons for which you may need emergency finances. There has to be enough money stashed up for paying off for different necessities if your regular paycheck has been stopped. Typically, it is said that you should have enough money to cover for 3-6 months’ expenses. However, building a bigger reserve would help considering the rate of unemployment.
Big health expense
If some big health expense shows up then it will bring some serious strain on your finances, particularly when you do not have a health insurance. But if you have an insurance cover, you may still have to bring out your money savings if you get a surgery, for instance, as it will be used to cover the co-payments and deductibles of your policy.
If you have a car and that is your main transportation mode then you can’t really survive when it is compromised. You won’t be able to reach your workplace, take care of your family or even hang out on a weekend. So, it is something that should be immediately fixed or replaced if the situation is even worse. Having an emergency fund set up will allow you to see off this hard time without going into debt.
If there is a sudden death in your family them you might be forced to buy a plane ticket at the last minute, and that too at exorbitant price, so that you may reach the funeral in time. Definitely, you would never like such a big expense to linger on the bill of your credit card and rack up the interest. If there is a fund for such emergencies then you won’t have to really worry about such expenses as there will be enough reserve cash for you to pay that bill right away.