The emergency fund is so underrated and when I ask people if they have one, more often than not, they say something along the lines of not yet but eventually they'll work on that. The thing is, it's not that enormous of a thing. You just need $500-$1,000 in place and then this fund can save your from many things. If you want to know how to get started, see my post about being on a budget to learn how to get one in place. Now I'll tell you how an emergency fund can benefit you financially.
1. You don't have to have your goals interrupted.
If you're working on building up a savings fund, paying off debt, or even getting on a budget, having an emergency fund can make sure if anything sudden comes up....let's say a car repair...you have the money to cover it and it won't interrupt your focus on your goals. The last thing you want to do when paying off debt is take on more, so put the credit card away and remember that an emergency fund is for just that...emergencies!
2. You can have mini emergency funds for different categories.
Taking that a step further, you can actually set up multiple emergency funds for different things like vet costs, car repairs, and anything else that may come up throughout the year. I have a main emergency fund with $1,000 and then I have a pet fund, a car fund, and a medical emergency fund to cover co-pays and prescriptions. Do whatever works for you, but whatever way you do it, make sure you have some sort of fund in place!
3. You won't have to panic at a sudden expense.
The whole point of having this money set aside for use during an emergency is the simple fact that an emergency can be an upsetting, stressful moment. It's a much better thing when you can focus on how to remedy the issue without immediately freaking out over where you'll come up with the money. Give yourself that relief by having an emergency fund in place at all times.
4. You can pay down debt without adding to it.
If you were always using a credit card for emergencies before, stop that! Now you can pay for an emergency right away without adding back to the debt amount your currently trying to pay down. This can also help improve your credit score as you get your debt more under control.
These are just 4 ways that an emergency fund can save your finances when an emergency happens. Do you have a fund like this in place?
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