Family

7 Reasons Why You May Need an Emergency Fund

Chances are, you hear left and right that you need to save up. Save up for your retirement, save up for a down payment on a house, save just because you should save. And of course for an emergency fund. Even if you’re trying to build a more successful business you’ll still hear on and on about needing an emergency fund. One for your personal life, and one for your business.

That’s a lot of saving, isn’t it?! On average one-third of people completely skip out on building an emergency fund. Business owner or not, it gets completely neglected. Everyone has their own reasoning for why they don’t have an emergency fund. Some households simply can’t afford to put back money to save, while others personally choose not to. Whatever the case may be, these are some reasons why you may need to build an emergency fund for yourself.

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Job/ Business Loss

It’s never fun to think about but this happens. When the economy gets bad people tend to get laid off or businesses begin to get rocky. This alone should be one of the biggest reasons why you should have an emergency fund. Your job or business is never guaranteed and the most recent pandemic is the perfect example of this. The general rule of thumb when it comes to saving for an emergency fund would be to save around three to six months’ worth of expenses. But it may be wiser to save up some more than it’s about 40 weeks of on average someone is unemployed after getting laid off.

Health care expenses

This can come in a variety of forms such as getting into an accident, dental issues, pregnancy, or so much more. You never truly can anticipate when something like this could happen. Plus, you shouldn’t safely assume that your insurance is going to just cover everything.  

So it’s best to just start expecting the unexpected, and begin saving for an emergency fund. If you haven’t done so already, you may want to think about looking into Medicare and its accompanying supplement plans, (https://www.medisupps.com/medicare-supplement-plans/medicare-supplement-plans-2023/) to see how this can help you save more money in the long run too. There are a lot of solutions out there that you may want to consider, especially if you have children. This is because they are accident-prone, their immune systems aren’t the strongest, and their developing bodies will need to see a professional from time to time. You will feel better about making these types of appointments when you know that you have the funds to cover the costs, so be sure to start saving as soon as possible.

Legal representation

You can look into Solicitor Reviews online, but hiring one isn’t for free. There could be a variety of reasons why you need one, even if it’s an emergency such as paperwork, legal representation, or other things. Emergency funds are meant to cover emergency situations and this could also include having to hire a professional on the spot!

Repairs

This could include home repairs such as foundation repair in Davenport, needing to get a plumber, a contractor due to a leaky roof, or among other things with your home. This could even mean getting repairs on electronics such as your computer or car repairs. Repairs happen, repairs are common and often needed. While insurance and warranty can be great for covering repairs these sorts of things don’t always cover everything you need. 

One way to avoid this cutting into your emergency fund would to be periodically get everything checked. This could include hiring a contractor once a year to check your home, one to two times a year hiring a plumber to check your plumbing, and taking your car into the shop after it reaches so many miles.

Funeral costs

Nobody likes to think about having to unexpectedly pay for a funeral. But unfortunately, it’s a common theme that happens. If you have sick or aging loved ones, talk to them about their funeral plans and whether or not they have life insurance. Funerals are known for setting back grieving families in the thousands. So whether it’s you, or your loved ones, begin looking into a  savings system or talk about ways this stressful situation can be completely avoided.

Unexpected bills

Everyone is bound to experience this at least once in their life. You think you’re all caught up with your bills and then out of nowhere you get a huge one. This could be something such as owing back taxes to the government, electricity bills being just too high, or other situations. It’s never grand but this is common and households tend to get these large unexpected bills a couple of times per year, especially in the winter months.

Pregnancy

Children are expensive, and there isn’t a doubt in the world about that. Pregnancies, especially unplanned pregnancies can be more stressful but just as expensive as a planned one. An emergency fund can help cover this such as covering the medical bills for the appointments, delivering, or even covering everything the baby will need from diapers to toys. 

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