Top 10 Reasons Why You Need an Emergency Fund Now
January 30, 2018 |
You get into a car crash. Your kid falls and breaks his arm. Your spouse gets laid off. No one really wants to think about these kinds of things happening. We all hope that we can get through life without having bad things happen to us. But what happens when they do? Are you prepared?
At Dime, we want to help you make smart decisions with your money, and that’s where an emergency fund comes in. This financial safety net will be there for you if — and when — unexpected expenses arise.
So what is an emergency fund?
Emergency funds — sometimes called rainy day funds — are savings accounts that you set up and set aside specifically to help you when emergencies happen. Most experts agree that the best emergency funds have enough money to cover about 6-12 months of your expenses (rent/mortgage, utilities, car payments, groceries, etc.).
There are hundreds — even thousands — of ways an emergency fund can come save your bacon. We’ve pulled together the top ten most common reasons why you should set up an emergency fund today.
Car repairs. If you’re one of the millions of Americans who rely on a car to get to and from work each day, needing repairs can cost more than just the mechanic’s bill. Your emergency fund can help cover the costs of repairing your car, as well as any work you may have missed.
Pregnancy. Babies are cute — and expensive. With all the sudden expenses that come hand-in-hand with a new baby, you’ll need to rethink your budget. But lucky for you, you’ve got an emergency fund to help offset some of those necessary costs.
Having to take a pay cut. Whether your company has to make cuts, or you find your dream job but it doesn’t pay as much as your current job, or if you aren’t getting the hours you used to, a pay cut could have a significant impact on your finances. Good thing you have that emergency fund to make up the difference while you figure things out.
Medical bills. Even with the best insurance, there are always medical bills when you or a family member becomes sick or injured. Having a fund on hand to cover the out-of-pocket expenses will really make things better.
Resigning, getting laid off, or being fired. Whatever the reason, job loss is one of the most common reasons why having an emergency fund on hand. If you already have another job lined up, or are lucky enough to find a new position quickly, then you may not need to use your emergency fund money to cover your expenses. But if you need to spend time hunting for the right job, having that extra money to cover you will be a huge relief.
Getting divorced. Everyone wants to think that they’re going to live happily ever after, and while we hope that’s true, you never know what’s coming around the bend for your relationship. If you and your spouse decide to separate, having an emergency fund to cover everything from attorney’s fees to new furniture in your new home will really be helpful.
Having your identity stolen. It seems like every month we hear about a new data breach with more personal information stolen, so this reason seems to be increasingly more likely all the time. If you’re one of the unlucky ones and have your identity stolen, your credit ruined, your credit cards maxed, or other financial issues, having an emergency fund will feel like a miracle.
Getting sick or injured. Now, we don’t mean getting the cold or a really bad paper cut. But if you get seriously ill or injured, disability might not be enough to cover all of your expenses, especially if you can’t work. If you have an emergency fund there to support you, you can rest and recuperate a little easier.
Natural disasters. No one can plan for a natural disaster to hit. From lightning strikes that cause fires to hurricanes that flood entire cities, natural disasters can happen at any time. If Mother Nature decides to wreak havoc on your car, home, or your family, an emergency fund could help cover what insurance won’t.
The passing of a family member. It’s hard enough emotionally trying to deal with the passing of a loved one, but there are often expenses that come along and pile up. An emergency fund can help take away some of the stress and anxiety of dealing with a loved one’s passing.
These are only a few of the more common ways you can use an emergency fund, but this list is by no means exhaustive. But hopefully, you can see just how important it is to have an emergency fund in your corner.
The experts at Dime Community Bank are here to help you set up the emergency fund that’s right for you. Let us know how we can help today. Call 1-800-321-DIME (3463) to get started.