Emergency fund
Credit to Author: Tempo Desk| Date: Wed, 27 Feb 2019 16:30:15 +0000
ARE you an adventurous type of a person? Have you ever tried extreme sports? Can you imagine yourself wall climbing without a safety harness or doing some extreme outdoor activities such as zip lines without some sort of protection?
Now let’s translate that to our financial journey: Perhaps transitioning to another career without at least three months worth of financial buffer or maybe doing an investment move which later ended up as a loss?
You see, our financial journey is similar to our daily activities, we need protection and fall backs to make sure that we do not hurt ourselves and our family should something undesirable happens. In our financial life, we call that protection an emergency fund.
An emergency fund is a stash of money set aside to cover the financial surprises that may come our way. These unexpected events can be stressful and costly especially when you do not have money.
The main purpose why people consider an emergency fund is to protect themselves and their family from losing financial security because of some unanticipated and unfortunate events such as loss of job, sickness, relatives borrowing money, medical expenses, and broken appliances or repairs, etc.
If you still haven’t entertained the thought of having an emergency fund, here are three reasons that will convince you that you’ll need one:
- The future is uncertain
A lot of people fear the unknown and that includes the future. What happens after that major investment you made? What’s the next big move after the career switch? Will you be able to provide well for your continuously growing family?
Anything about the future can be scary simply because we cannot see it. This is the ultimate reason why it is very important to secure our future. Your business may be garnering tremendous success today but no one knows where it will be years from now.
While everything about the future is yet to be discovered, we can start securing it today.
- You need security
Having our finances secured is rewarded with peace. When people recognize that a fallback is available for them just in case, they somehow achieve a feeling of security and then peace.
Your business may have caused you a fortune when you started it but the investments you made along the way assure you that you can still get something even if something unfortunate happens to your business.
When we operate with a sense of security, we learn to take more risks and our financial decisions are not crippled by the fear of losing.
- Prevention is better than cure even in your finances
Regret or feeling sorry is the last thing people want to deal with when it comes to money matters.
People save now because they want to enjoy their money in the days to come without compromising what they need at the present. They learn to budget their money so that they could avoid overspending which can lead to deficits.
We always want to play safe, look after our interests, and spare ourselves from unnecessary difficulties. After all, prevention is always better than cure.
“Let him who would enjoy a good future waste none of his present” – Roger Babson
THINK. REFLECT. APPLY.
Why is it important to have an emergency fund? How can having an emergency fund spare you from unforeseen financial difficulties? Have you started considering having an emergency fund could work for you?