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.
Continue reading “7 Reasons Why You May Need an Emergency Fund”Keeping your finances on the right track is always going to be a matter of making sure that you are preparing for the worst even when you are hoping for the best. Here are some inevitable costs that you probably won’t be able to escape in your life.
Though it might seem peculiar, we can start with the very last cost that you will need to think about that is completely unavoidable. What makes this cost special is that you won’t be paying the price. Instead, this will fall to your dependents. That’s why, believe it or not, a lot of people once they reach a certain age, will set up a funeral fund. This is designed to pay for all the costs of a funeral including the casket, tombstone, funeral photography and even plots of land. It might sound morbid, but it’s something that you might eventually want to think about.
You could also think about the cost of your child’s education. Now, it’s worth noting that you are under no obligation to pay for the costs of your child’s higher education. However, this is something that many parents will aim for to help their child avoid unnecessary levels of debt later in life. If you are worried about the cost, then it’s recommended that you do think about looking at the average cost that you will need to pay for your child’s college tuition. This will help ensure that you can set a saving goal. You should also look at savings accounts and investment opportunities that will ensure you can quickly grow these funds.
It’s also worth thinking about the cost of a home renovation. You might think that you can avoid this cost, but don’t be so sure. If you buy a home, then at some point, you will need to complete renovation work. Renovating your home will mean that you can deal with issues related to wear and tear that will limit the value of the property overtime.
It can also ensure that your home continues to be a safe and comfortable place to live for you and your family. This means that you might also be able to avoid selling your house to move to another property. Instead, with the right renovations, your house could become a forever home. It might also be worth thinking about emergency renovations that you might need to complete. There are lots of examples including flooding damage that will need to be corrected without any delays.
Next, you should think about your retirement. It’s never too early to start thinking about saving for your retirement. In fact, experts agree that you should be putting money away for your retirement as early as your twenties. In doing so, you can guarantee that your retirement does not catch you by surprise. Don’t forget, once you retire, you won’t have a fixed income to fall back on. As such, you will need to make sure to save enough money overtime to afford everything that you want during your retirement. This could include a trip around the world or something more practical such as care facilities when you begin to lose your independence. A financial planner will explain exactly how much you need to save for your retirement plan.
Finally, if you have a family, then you likely will need to consider the cost of transport. Most people will want to buy a car at some point that is large enough for everyone in the household. This can be quite an expensive purchase and, similar to a home, a choice like this probably won’t fit squarely into your budget. Instead, you need to make sure that you look at other options. You can save up the money to buy a vehicle. Or, you can think about purchasing a vehicle on finance. If you purchase a vehicle on finance, then you can make it easier to afford over an extended period. If you live in a city you might want to skip the car purchase and instead rely on public transport. It’s a great way to keep things cost friendly.
You can also think about purchasing a car second-hand rather than brand new. This is another way to save and spend less overall.
We hope this helps you understand some of the key costs that you do need to be prepared for in the future. By recognizing that these costs are somewhat inevitable, you will be able to make sure that they don’t catch you off guard.
Knowing what to do when you experience an emergency is crucial – if you’re not sure what to do, it can be difficult to find out in the moment because you feel stressed and like your brain isn’t working properly. Below, you’ll find a few common family emergencies and how to navigate them. Take a look.
Your Child is Sick
When your child is sick, getting time off work last minute can be a nightmare. However, your child comes first. Make sure you stress to your boss that you’re disappointed and you know it’s not ideal, but also present them with solutions. Tell them how you can rectify this at a later date and how you’ll make yourself available in the future.
It’s Your Child’s Birthday/Another Special Occasion and You’re Going To Miss It
Your child’s birthday is so important when they’re young, and things like plays and concerts can be huge for them. If you’re going to miss something like this, it’s normal to feel guilty. However, this is your opportunity to become a real role model for your child. See if you can find ways to be involved while you work, or whatever it is you have to do. Maybe you could facetime your child on your lunch break, or message them throughout the day to encourage them. This will still mean a lot to them.
Your Car Breaks Down
A car break down can come suddenly and without warning, and this can be a nightmare if you have somewhere important to be. Quick Car Credit could offer you car finance for a new car if you know your old one is done for, but you should also know what to do straight away to rectify the situation. Who do you call? How will you get to where you’re going? Make sure you have your own break down plan ready.
Needing Time Off Work
A family emergency can mean needing some time off work, but how long can you have off? There is no limit really, and it’ll depend on your workplace. Some reasons you might take time off include:
The reasons above mostly relate to dependents, which means people who are dependent on you. This might mean your kids, or even a parent. Anybody who depends on you. However, most workplaces will also allow time off for close family member emergencies.
It’s normal to worry about an employer disciplining or dismissing you, but they can not treat you badly for needing to take time off. It can’t be counted as a sickness or unauthorised absence. If you feel you are being treated unfairly, citizen’s advice will be able to help you. Providing you are honest and do your best to keep your employer in the loop, you should be treated fairly. Leave your thoughts below – thanks for reading.
The future is full of unknowns and many things can happen to us that are beyond our control. That also extends to our finances, so it’s wise to have an emergency fund to help cover unexpected expenses.
Are you prepared if you lose your job or get sick? What would you do in a natural disaster? If your car or household appliances break down, can you fix or replace them?
An emergency fund is an answer to all of these questions. But how do you get started from scratch? Our four tips will help …
1) Prioritize
To successfully build your emergency fund you need to make it a priority. It’s all too easy to skip putting money aside one week because you tell yourself that the likelihood of an emergency is low, but it’s that mentality that will leave you stranded when one occurs.
Choose a set amount to put aside and treat it as a necessity like the electric bill or paying rent. You could even set up an automated bank transfer from your checking account to a savings account so you stay committed.
Another trick is to formulate a budget that excludes your emergency savings from income. If you pretend you never had $20 every week, you won’t miss it. And such a small sum will grow to over $1,000 in one year!
2) Budget
You can’t save efficiently without having a firm understanding of your finances. That’s why it’s so important to budget, and it really isn’t that difficult to do. Whether you use an app or a good old-fashioned pen and pad, note down all the money you have coming in each month and all the expenses you have going out.
This should include your salary or wages and any other regular income, and all the regular expenses such as your mortgage, rent, utilities, car payments etc. It is also wise to estimate more sporadic income and expenses (you an average this out if you keep track over several months). For example, going out to the movies and buying new clothing.
With your budget clear, you now know exactly how much money you have left over each month and can choose a realistic amount to put aside for emergencies.
3) Set the size of your Fund
Ideally, your emergency fund should be able to cover your basic living expenses for three to six months. This gives you plenty of time to find a new job if you lose it, get your health in order if it takes you out of work, and re-settle in the case of a natural disaster.
The pot will also be big enough to cover other emergency expenses that don’t directly impact your income or home situation.
Of course, everyone’s situation is different and you may have a particularly high and stable income, home equity, and a great credit rating – all of which decrease your odds of a financial emergency. In that case, you may set a lower amount for your emergency fund.
On the flipside, if you’re renting, just starting out in your career or do not have stable work, and you have poor credit or are nearing your credit limits, then it’s wise to build a larger emergency fund to fall back on.
Note: Your fund should always be full, so if you tap into it, remember to start saving again. You might even choose to jump ahead of your savings schedule by using guides like ‘how to make 500 dollars fast,’ to give your fund a quick refill.
4) Make it Work for You
Having some cash on hand is always a good idea for emergencies, but you don’t want the bulk of your fund under the mattress. The best option is a savings account that gives you full access at any time. This way you will earn some interest to make saving easier and you’ll still be able to withdraw as much as you need at any time during an emergency.
You may decide to put a percentage of your fund in a less liquid account, such as a mutual fund or even physical precious metals like gold and silver. Diversifying is always wise (bank collapses do happen), but you want the bulk of your fund accessible on the day you need it.
By following this simple advice, you will be able to create an accessible insurance policy to protect you and your family from any and all financial emergencies.
Have you ever found yourself in the middle of a financial emergency? You may even be experiencing one at this moment; what can you do? You’re not alone, over 76 million Americans struggle each year according to a survey from the Federal Reserve Bank. There are lots of reasons and causes of financial stress. Whether you’re in the middle of a crisis, or want to help plan for the future, there are options available to get you back on your feet.
Here’s five tips on how to deal with a financial emergency:
An emergency fund is a specific savings account that you only touch in the event of an emergency. Personal financial planners will tell you that an emergency fund is even more important than paying off certain kinds of debt—because having an emergency fund is what prevents you from going into debt, especially debt with burdensome terms like payday loans. Follow the link to find out more: https://www.gofundme.com/c/blog/emergency-fund
How do you get control of your finances? Spending less money sounds easier than it really is. Creating a budget (and sticking to it) can be a great tool for spending less, and saving more. Here are some tips for creating a budget.
If you need additional assistance in creating a budget, take a look at this article from US News.
3. Cut Expenses
For other tips on saving money by reducing expenses, Trent Hamm has written up 40 ways to save on monthly expenses.
4. Prioritize Your Expenses
Are your bills overwhelming you?
A financial crisis can make it hard to follow your budget. It’s important to be pay your monthly bills, but sometimes this is impossible.
Here are some tips on how you can prioritize your expenses and get through the crisis:
For additional tools on prioritizing your expenses, visit the United Way’s article.
5. Reduce Your Debt
How many of you want to get rid of your debt? Even if you’re on a tight budget you can follow these tips to be debt free over time.
Use money that you’ve freed up to start paying off the smallest debt. For all other debts you will want to maintain the minimum payment. Once you pay off the small debt you can use that money on the next loan repeating the process.
For more tips on reducing debt, take a look at the Huffington Post article from Tiffany Allche.
6. Get Financial Help
What if you’ve exhausted all other options for managing a financial emergency?
Ideally you would have access to emergency funds that have been saved up over time for a situation like this, but if you’re currently experiencing a hardship, you need cash urgently.
An option would be to get a loan to help pay for bills, essentials for the household, and other needs during the emergency.
A traditional bank loan may not be an option. You may be asking, what can I do? A 30 day payday loan, like one from ElcLoans, can help you.
Used responsibly this can get you through an emergency until you’re back on your feet.
Conclusion
I hope that you found this information helpful.
Having a financial crisis can be a stressful time, but there are tools and resources available to help get you through the hard times.
Each of these tips are options that you can put into practice immediately.
Do you have any other tips that you would like to share?
If you found this article helpful, be sure to share it with your friends and family.
