If you are struggling with every unexpected expense, you may benefit from an emergency fund. Your emergency fund can protect you from all of the unexpected expenses you may encounter whether big or small. Here are eight reasons you should have an emergency fund.
1. You Are Trying to Get Out of Debt
An emergency fund can help cover the things you don't budget for like car repairs or medical costs. That way you can stay focused on getting out of debt.
2. You Have Just Started Budgeting
When you first start budgeting, you may be leaving out some of the expenses that you need to plan for. If something comes up, you can use your emergency funds and adjust your budget as needed.
3. You Only Have One Income
If you only have one source of income, you are single or if you the sole income provider in your family, you should work on having a year's worth of expenses saved up.
4. You Are Self-Employed or a Contractor
If you are self-employed, an independent contractor or if you work a job that does not allow you to claim unemployment benefits, it is important to have a good emergency fund saved up.
5. You Own Your Home
Home repairs can be expensive, as is replacing an air conditioner or furnace. Try setting up funds to save for these expenses before they occur.
Be sure to plan for your taxes in your budget.
6. You Live Far Away from Family
It can be expensive to travel home, and the costs go up if you need to travel at the last minute for an emergency. It helps to have a good emergency fund saved up to cover the cost of last minute tickets to home or other family members in the event of a medical emergency or a funeral.
7. You Have Medical Issues
Medical issues can be expensive and insurance companies may not pay everything that you expect them to pay. You may also miss work and run out of sick pay which can lead to bigger issues.
8. You Are Saving for a Goal
If you are working toward a goal like owning a home, starting a business, or going on vacation your emergency savings can stop you from dipping into those funds when unexpected expenses crop up.