Currently, paying off debt is my main focus, but there have been a few different times I was glad I had a “baby” emergency fund in place. One time was when I need to do repairs on my car so I could keep driving it to get to work, ya know so I could keep making money and all. Because of things like this, I can’t even imagine how I lived without one for so long. Now that I have an emergency fund in place and I’ve seen it’s benefits, I am 100% of the opinion that everyone needs at least a little bit of an emergency fund. Here are a few reasons why you should have an emergency fund.
Avoid Further Debt
As I said before, I’m still working on paying off my debt but I am also continuing to contribute to my emergency fund. I know that if I faced an emergency without having an emergency fund in place, I’d have to either put some expenses back on my credit cards, or I’d have to take out a short-term loan from a place like Check ‘n Go. I’m not saying those places don’t have merit, but I sure wouldn’t have to have to use one unless I absolutely had to. Having an emergency fund in place will save you from having to do that.
Give You Peace of Mind
Having an emergency fund in places helps me sleep better at night. My fund is not up to what I would ideally like to see it at, but the higher it gets built up the easier I am able to sleep at night knowing that I am financially secure. I’ve heard before that this worrying is a really a “woman thing”, but I think everyone without an emergency fund should be worrying at night. Having easily accessible cash to pay for unexpected expenses is a must in my mind.
Still Earning Interest
If you shop around, you can still earn at least a little bit of interest on the money in your emergency fund. I used to keep mine at my traditional brick and mortar bank, but when I realized I could earn more interest elsewhere, I decided to move my emergency fund to a different institution. The interest I earn on my emergency fund doesn’t add up to much, but even a little bit helps! Besides, the point of an emergency fund isn’t to use the account as a money-making investment, it’s simply to have cash on hand for an emergency (duh!).
Emergency funds have a lot of pros and not a lot of cons, and I think it’s important for everyone to have at least a little emergency fund no matter your age, marital status, if you have kids or not, your financial situation, or home ownership status. Of course, some of these factors do need to be taken into account when you are deciding how much money to keep in your emergency fund, but that’s a topic for another day. 🙂
Do you have an emergency fund? Why or why not.