4 Reasons to Start an Emergency Fund
Contemplating about starting a contingency fund? Here are 4 reasons why it is the perfect choice and why you should start on it right away.
While a lot has been said and written about “having a positive outlook on life”, there is no dearth of advice on planning for emergencies and “saving for a rainy day”.
Financial experts have been talking about starting a contingency fund that can cover your living expenses for at least 3 months long before the current pandemic. If the need for an emergency fund has not been obvious to you even after COVID-19, then here are 4 reasons why you should start to think of one today:
- Loss of Income/Job: Economic crisis, job loss or other reasons like a global pandemic that affect your income can directly have a great impact on your lifestyle. But if you have an emergency fund, you can meet your living expenses without affecting your lifestyle while you look for a new job or find new sources of income
- Personal Accident: It goes without saying that if you meet with an accident, you might be unable to work for a while. A personal accident insurance will help meet your medical costs while your savings in the emergency fund can finance the living expenses of your family
- Medical Emergency: Medical emergencies can come at any time. The cost of diagnostics and treatments can also quickly add up to eat a large chunk of your savings. An emergency fund can help you deal with a medical emergency in the short-term so that you do not have to dip into your wealth-building assets
- Peace of Mind: One of the main reasons why you should start an emergency fund is that it gives you peace of mind. You can live your life knowing that you are more than prepared for any personal or medical emergencies
This is the first post in our emergency fund series. We will be covering it in detail in the coming days with details on how to plan and start an emergency fund.
What do you think of the first in the series? Share your thoughts on emergency funds with us.