I am a huge believer in emergency funds. An emergency fund is where you save money on the side in case any big expense or lack of income were to occur in the future. You never know when this may happen, as life likes to throw a person curveballs every now and then.
Below are 5 reasons you need an emergency fund.
An emergency fund is key because it can help prevent debt, which in turn means that it can also help make sure that your credit score is up.
This is because if you do not have an emergency fund, then you may be more likely to put emergency expenses on your credit card and rack up credit card debt since that may be the only way you are able to afford the large expense. This can then impact your credit score because you may not be able to pay the credit card balance in full.
2. An emergency fund can help you if you were to lose your job.
One big thing that an emergency fund is usually used for is if you were to lose your job, such as if you got fired, you were forced to quit, or if you got laid off.
An emergency fund can help you during the time while you are trying to find another job and get back on your feet. This way, you can continue to pay your bills and focus on your job search.
3. It can help you if you have a home.
If you have a home, then I am sure you know all of the expenses that go into owning one. Expenses can occasionally pop up out of what seems like nowhere, such as a hole in your roof, a basement flood, a plumbing pipe breaks, and more. An emergency fund can help you pay for large home expenses without getting too stressed out.
4. An emergency fund can be a lifesaver if you have a car.
Another reason to have an emergency fund is if you have a car. It can help you if your car ever needs to be repaired, if you popped a tire and then need to replace all of your tires (such as if you have an all wheel drive car), and more.
5. It can help you in times of medical bills.
The last reason I wanted to talk about today in this post is that an emergency fund can help you if you come across medical bills. You never know if something may happen, even if you think you are the healthiest person on earth. Life happens and you need to pay your medical bills when they are due, so an emergency fund can help you get through hard times.
Do you have an emergency fund? What reasons do you have it for?