By now, you know how challenging it is to maintain financial health, and that’s even before you factor in the additional expenses you’ll generate as you grow up, such as a mortgage, kids, and more. The cost of living makes it near impossible to establish an emergency fund, but that doesn’t mean you shouldn’t try. You might think you’re in the clear, but there are several reasons why you need an emergency fund.
Unemployment
Unemployment is one of the most damaging issues you could face physically, mentally, and financially. While you may feel comfortable in your job, something could happen overnight where you end up without an office. There’s no point in tagging along with hubris and expecting the good times to last forever, so saving three to six months’ worth of expenses will help you and your family handle unexpected unemployment. These savings shouldn’t put as much strain on your life, and you have plenty of time to plan and fix things.
Medical Expenses
Another common problem is your medical expenses. While you have insurance, some treatments or injuries may not be covered entirely. You can be as careful as possible, but you could still be involved in an accident or develop a disease, so saving up enough to cover these expenses just in case will make you feel better about what could happen. No one wants to spend time in the hospital, but at least you have enough money to cover costs if you need to.
Legal Fees
Similarly, legal fees can quickly get out of hand if you are not careful. No one is perfect, and you can do everything right until one fateful moment flips your entire world. Car accidents or personal injury are two prominent requirements for legal fees, although Louisiana’s No Pay, No Play Law can soften the blow and means you only need to cover other expenses, such as medical bills. However, there could be more serious charges and costs, so having enough money to pay for a lawyer will put you in a stronger position.
Household Disasters
Leaky toilets, busted dryers, holes in the roof, and a flooded basement are just some of the possible household disasters you might encounter and they can be costly even with home insurance. You may need to pay out of pocket to fix things quickly and prevent further damage, so your emergency fund should cover most–if not all costs–until your insurance company pays out.
Car Problems
It often feels like you solve one problem only for another three to pop up at the same time. One significant issue is car troubles, and with the costs ranging from $500 – $600 on average, you need a savings buffer to ensure you can fix your car and get to work. Never accept that your car is running well because there’s always something that could happen tomorrow. It always helps to be prepared, so put aside a little each month to cover yourself.
Emergency!
Hopefully, you never need to deal with any of these issues but you never know what life will throw at you. It can take time to build a sufficient emergency fund, but doing so puts you in a much more comfortable position and you’ll have plenty of time to overcome any issues you encounter without risking your livelihood, home, and sanity.
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