7 Reasons You Need to Start an Emergency Money Fund
You might think you don’t need an emergency fund for any major surprising financial outgoings – but that’s why you need one! While you should already have your monthly budgets in order, these don’t take into account any large expenditures that are unplanned for. That’s why you need an emergency fund, just in case. Let’s look at 8 reasons why it’s a good idea: Whether you’re trying to use your credit cards to come up with extra cash or not, one of these tips could be for you.
1. An emergency fund makes it easier to save
When you realise you need a bit of extra money for a one-off emergency expenditure, it’s not uncommon for you to simply not have enough put aside. By having an actual fund that you budget for each month, you’ll make it clearer and easier to save for, just in case. A good savings account can really make a difference to your finances. Let’s have a look at a few major expenditures that might nor be covered by your monthly budgets…
2. In case your car breaks down
Cars are expensive. While you might have budgeted for insurance and fuel each month – what happens if your car breaks down? While buying a new one is obviously going to cost a lot, repairs can be expensive too. Make sure you’ve got enough to keep you covered so that you can stay mobile.
3. In case you lose your job
All your budgets and monthly expenditures will depend on you still being able to earn what you earn now. But what if you get fired or lose your job somehow? This could put your finances under a huge amount of pressure. Make sure you’ve got enough money to cover things for a few months so that you can find another job that pays a similar amount.
4. To pay for home repairs
If your windows break or you need a new boiler, this could cost a lot more than you think. That’s another reason why you need a competent emergency fund.
5. So you don’t waste the money on un-needed luxuries
When all your money simply goes into your main bank account each month, it’s not uncommon to simply spend, spend and spend. That’s why a separate emergency fund is such a good idea. It keeps that money separate so that you’ve always got it waiting for you when you need it, rather than just being money you spend each month.
6. So you can save with better interest rates
If you put your emergency money in a fund that isn’t a current account, you might be able to get a better interest rate and treat it as savings. While it should still be an account where it’s easy to access your money, you get the benefit of being able to save more when you don’t actually need to access the money.
7. To make sure you’ve got enough for any eventuality
Whether your car breaks or you need a new boiler – having a bit of cash to one side for emergencies is a great idea. Start building your emergency fund today.
Image Credits: Money Fund from Phongphan /Shutterstock