It can feel hard to pay bills each month, much less save for something that may or may not occur. But If the Covid-19 pandemic has taught us anything, it’s that the unexpected can and does happen. That’s why you need an emergency fund.
Experts suggest saving 3 to 6 months of expenses in an emergency fund. This kind of savings may feel like an unattainable luxury (especially during a period of inflation) but having even $500 tucked away can make a big difference in your financial stability. No one likes to think about potential crisis, but it’s even worse to be unprepared. Read on to learn 5 ways an emergency fund could help you in the future.
Unexpected Medical Bills
In 2020, 17% of adults had major, unexpected medical bills with the median cost between $1,000-$1,999. Dealing with a health emergency is one of the top stressors in life. Adding financial strain to an already stressful situation can make your health outcomes worse. An emergency fund can give you peace of mind while you or a loved one recovers.
Personal Property Repairs
If you’re a homeowner or have ever purchased a new car, you probably remember how it felt to be handed the keys to your new property. The possibilities and the sense of accomplishment make it a thrilling experience. However, ownership often comes with maintenance costs. Perhaps you need to replace the roof, or your car needs a new set of tires. Being able to draw on an emergency fund can take some the stress out infrequent but routine upkeep.
Unemployment
An estimated 23 million people lost their jobs in April of 2020. Many wouldn’t have predicted this record number of layoffs just a year prior. Job loss can be scary but having a financial cushion can help you bridge the gap between jobs. One way to be prepared is to add all your monthly expenses like housing, food, and transportation. Then strive to save enough to cover three months, giving you time to find a new job without taking on debt.
Travel to Attend Family Emergencies
What if you had a family emergency or death that required travel? Would you be able to purchase a last-minute plane ticket or hotel? Knowing you can cover these costs can be a huge relief in a time of potential stress and grief.
Pet Health Emergency
According to the National Pet Owners Survey, conducted by the America Pet Products Association, 70% of U.S. homes owned a pet in 2021. Even the most pampered pets can have health emergencies that require surgery. It’s always a good idea to save money in case your beloved animal companion requires unexpected veterinary care.
The reasons to start an emergency fund are numerous and there are ways to make saving easy. Begin by opening a dedicated savings account and set up an automatic contribution each month. You’ll love the peace of mind you gain as your savings grows. As a trusted local provider of accounting and financial services, Neely’s Accounting is here to help. We’ve assisted countless clients in the Roanoke region. Call or contact us today to let us support you as you build your financial safety net.