Okay, those two pennies in the picture are probably not enough for your emergency fund, but they are a good start. There are many people in the world who live without an emergency fund, and that is just something I could not do.
I found a statistic the other day that said nearly 30% of people have no emergency fund at all. These people live paycheck to paycheck and have nothing leftover for anything that may come up and break their budget.
My emergency fund is something that I worked very hard for, and I wouldn’t have it any other way.
Here are 5 reasons you need an emergency fund:
1. It will help you stress less.
The number one thing I like about having my emergency fund is that it helps me stress less. If an unexpected expense comes up, I know that my emergency fund will usually be enough to cover it. I don’t have to go crazy over the smallest expenses.
No, I still don’t like it, of course, when things go wrong. However, my emergency fund makes everything seem much more manageable.
2. It can help you if you lose your job or if your work hours are cut.
One of the top uses for an emergency fund is for job loss or income loss. I use most of my emergency fund for if I have a bad month. Luckily, I haven’t had to use it for that yet though.
You never know if you may lose your job, if your hours may be cut, if you may have a bad freelancing month, and so on.
3. Something in your house is broken.
If you own your own home, then having an emergency fund is very important. Around 15% of our emergency fund is dedicated to any home repairs that may come up. Some repairs or maintenance may include: a furnace or air conditioner repair or replacement; pipe repair; roof repair; floor replacement; and so on.
I think our furnace and probably our air conditioner will both have to be replaced soon. I am not looking forward to those expenses at all! But, thankfully I have an emergency fund and I will be somewhat ready for when that time happens.
4. Your car needs a repair.
Car repairs are something that everyone dreads. I can’t think of anyone who actually looks forward to having to dish out money to pay for their car. Car problems also seem to pop up in really bad times or one right after the other.
Your emergency fund can help you when it comes to a car repair. If something were to happen, you would be prepared!
5. You have a medical emergency.
An emergency fund won’t prevent a medical emergency, but it can help get you through it. If you have a health insurance plan with a high deductible, then your emergency fund can help you pay for this. For us, we have a $12,000 deductible thank to the new health insurance plans in the USA.
Also, an emergency fund can help you continue to pay your bills if you are in the hospital and cannot work.
Do you have an emergency fund? Why or why not?