Continue reading to discover five reasons to create an emergency fund account and how having emergency savings can benefit your life.
1. Job Loss
Job loss is scary and a time of uncertainty. It leaves adults wondering how to take care of their family and home expenses. In addition to job losses being unpredictable and people not being prepared for them, it is too late to save for them by the time they happen.
Because of the low rates that unemployment insurance pays, it is essential to have an emergency stash of money saved. This can be an emergency savings fund. That money can go towards your mortgage or rent, food, and other monthly expenses that your paycheck would otherwise cover.
If your company has announced that layoffs are coming and you are uncertain if your position will be among them, there are some things you can do in advance.
- Networking with family and friends for job leads
- Paying off debt
- Negotiating lower payments with creditors
- Look for local resources
2. Health Expenses
For many, universal health insurance is a way to prevent families from being bankrupted by the high price of health coverage when a health emergency occurs.
Even when a person has health insurance, there are instances when insurance won’t cover certain conditions. For example, a couple having trouble getting pregnant and needing IVF may pay for that service themselves. The average cost for IVF is $26,000. Instead of creating debt by borrowing money, having a health expense emergency savings is vital.
In addition to health insurance offered through a job, you should take advantage of it if your company provides Health Insurance Savings (HSA) Accounts. While it may not cover all of your out-of-pocket medical expenses, it is a great start to paying medical costs.
3. Home Repairs
Regardless of how old or new your home is, home repairs are inevitable and many require immediate fixes to avoid more damage. While some are as simple as tightening a pipe, others are expenses and can create emotional and physical stress.
For instance, discovering a leak in your old roof can create immediate worry about costs. According to Ace Roofing Company, licensed roofing professionals in Texas, it can also create a safety hazard and ruin the aesthetic appeal of your property.
Instead of putting buckets around to catch the leak, having an expert in roofing systems assess the damage is vital. Some wear from wind and rain storms can be bolstered with repairs that have satisfied customers.
Having an emergency savings fund for repairs is essential and may save from additional maintenance.
4. Funeral Expenses
Although death is one of life’s inevitable events, millions of people still do not have health insurance. That is fine for wealthy individuals who can pay for a funeral and burial.
However, that is not the case for most. Today, more GoFundMe accounts help pay funeral expenses than any other reason.
Having an emergency savings fund that can help in death emergencies is vital, especially when the death is untimely. It prevents the family from holding the body longer than necessary to get the money ready for a funeral.
Having an emergency fund to cover funeral expenses helps keep families calm in instances of untimely death.
5. Reduce Stress
According to research, financially stressed people are twice as likely to suffer poor health. Their health conditions include headaches, gastrointestinal troubles, insomnia, and mental health.
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Having an emergency savings fund is a way to reduce stress because it takes away some of the "what ifs." There is safety and security in knowing that you are prepared and will be OK if a financial situation arises immensely satisfying.
As you have read, it is a significant accomplishment to save for a milestone purchase or something of great significance to you. However, in the case of an emergency, if you do not have a savings account, it can be a significant defeat.
That is why having an emergency savings fund is vital. The top five reasons to have emergency savings funds are listed above. Having that stash alleviates uncertainty and improves lives.
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