“You can’t predict the future, but you can prepare for it”
An emergency fund just like the name connotes is a fund set aside to cover the financial surprises life throws your way. These surprises can be family emergencies, unprecedented incidents that may occur in the future which can be quite stressful and costly.
Setting up an emergency fund helps you prepare adequately for such unpleasant moments and it is quite easy to do. There is just one important rule which also applies to other savings or investment plans and that is to be financially diligent, which would, in turn, enable you to enjoy the benefits.
In this part of the world, however, the practice of having an emergency fund is not quite common and people rarely think they have such need for it, that is until they encounter such situations where the need arises.
Why It is Important:
An emergency fund ensures your primary investment or savings towards a financial goal is not affected, it is like a backup of a backup plan. This simply means when unexpected incidents occur, you do not have to withdraw funds meant for a very important goal, which would have invariably stopped or slowed down the process of achieving the goal.
Some other valid reasons:
It is literally a lifesaver – In case of medical emergencies, an emergency fund helps you cover unexpected medical bills, most especially if you do not have a health insurance package. You do not have to look for where to get money for the bills which could delay medical treatment or attention.
Car Incidents/Repairs – If you’ve ever been involved in a car incident, then you know how heart cringing it when you have to start thinking of replacing the parts or repairing the vehicle, most especially when the other driver involved, who is most likely the cause isn’t forthcoming. When you have an emergency fund you know can easily pay for the repairs of your vehicle.
Family Emergencies – You never know when this would come up, it is unpredictable. Typically, a family emergency is something that occurs unexpectedly and affects the health or safety of your family members, such as your parents, children, or spouse. Common family emergencies in this category can include car accidents, sick children, or a death in the family. All these listed above means you have to spend money and it can be quite expensive sometimes, but with an emergency fund, you can easily sort them out.
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