Not preparing emergency funds properly leaves many people stuck in personal debt. In fact, you are not ready to face unexpected situations in the future, including the current coronavirus outbreak.
Building an emergency fund is the most important part of every financial plan. According to The Balance, Most financial experts advise you to at least prepare an emergency three to six months of living expenses.
Let’s look at the benefits that you will get when you have sufficient emergency funds.
Easily Repair Damaged Items
People who don’t have an emergency fund often let the problem go until it gets worse. Delaying repairs can make things worse and more costs will have to be spent in the future.
No Need to Worry when You are Sick
Even if you have health insurance, there may be medical bills that are not covered only by insurance.
When this happens, emergency funds can be utilized and can be used to meet these medical needs.
If you don’t prepare an emergency fund, then you might feel worried when you are sick.
Have a Money Reserve When Receiving Layoffs
There is no guaranteed guarantee that you will be employed for life in a company. Poor company performance or accidental mistakes can make you have to go out and receive layoffs.
Having an emergency fund allows you to continue to pay bills and all necessities when you have no income.
Avoide Debt
If you don’t have the cash to face an emergency, then you will most likely use a credit card or owe someone else. In fact, the problem might get worse, when you can’t pay the debt.
An emergency fund is very useful to prevent you from facing a debt explosion when an emergency occurs.
Go Shopping
When you don’t have savings, going out to dinner or at expensive restaurants will be a very bad idea.
This will be very different if you have an emergency fund in savings. You can occasionally pamper yourself by buying clothes or eating in expensive restaurants using emergency funds.
However, you must immediately refill the emergency fund so that the financial future becomes safe.
Savings for Emergencies
Especially for current conditions, you need an emergency fund to meet your needs. Many cities in each country impose lockdowns to break the spread of the coronavirus. Besides, many entrepreneurs are forced to close their businesses temporarily to maintain their health. So, many of them are confused to meet their daily needs.
Thus, don’t wait for emergencies first and then have an emergency fund. You have to prepare the emergency fund as early as possible because we will never know what will happen in the future.
Read more: How to Invest during Coronavirus Pandemic
