An emergency fund is important for every family or individual. Apart from the normal savings, it is still important to have funds set aside for an emergency. An emergency fund should be accessible whenever you need it.
The size of the fund is not standard, and it will depend on your income. Financial experts say that your emergency fund should be able to sustain your lifestyle for at least six months in case you stop getting your normal income. If you do not have an emergency fund, then here are some reasons to consider building one:
Loss of Job or Income
It is important to build an emergency fund to take care of the loss of a job or income. In case you lose your job, you still need to meet your bills like rent and other expenses. An emergency fund will help you in meeting these expenses and make sure that you still live a decent life even without an income.
With a good fund, you should be able to live comfortably for some months before you finally get a new source of income. Having some money to sustain you for a few months is okay, but there are still some people who have an emergency fund that can go for years.
Meet Health Expenses
An emergency fund will help you to meet health expenses. The medical issues might not cover some health expenses. For instance, dental, medical bills can be very expensive, and you need to look for a way to pay them. Instead of using your normal income to pay for such expenses, an emergency fund can save you.
Some repairs come unexpectedly, and you need to pay for them so that you can continue with your life. For instance, in case your car needs repair apart from the normal service, you need to use the emergency fund. Repairs in your home like plumbing, roofing and other areas of the home might be expensive, and the emergency fund will cover it without affecting your other bills.
In case you need to travel on short notice, an emergency fund will take care of your expenses. The fund will help you cover flight tickets and any other expense that you might incur during your trip. Traveling can be very expensive, and the last thing that you want is to use your regular income on the trip.