There is nobody who is sure of what happens tomorrow. This means you have to spend what you have today and leave something for tomorrow. Lots of people save money for future plan but only a few keep emergency funds. It is easy to mistaken savings for emergency funds but these are two different things.
Savings are for something you plan to do in the future while with emergency funds you are never certain of what you will use the money for. In fact, it is saving for uncertainties.
Emergency funds should be part of your financial plan. You should be ready for all that awaits you in the future. In this article, the importance of emergency funds is emphasized and the 7 reasons provided here should convince you to start keeping a kitty for the unexpected eventualities.
Stands in a financial gap when you lose a job
You may have a well-paying job today and tomorrow you are fired. Your company may be cutting down on employees or you just got unlucky that your boss found you with a grave mistake. How then do you survive without a salary or a wage? You will not lose a job today and get another soon. It may take months or even a year.
This is one of the times when emergency kitty can be activated. Depending on how much you had put into emergency pool of money, it may last you till you get another job or find an alternative source of income.
A rare business opportunity
If you are a business person, you know how hard it is to get a good business opportunity. They do happen but not as often as you may wish. What will you do when the company you have been wishing to buy shares from has now advertised an Initial Public Offer (IPO)? If you do not have funds set aside for such an opportunity you will let it pass.
With an emergency monetary plan, you can never miss lifetime opportunities such as this one.
In the event of sickness
Sickness never knows that you do not have money. There is a way with bad things happening at times you least expect them to. Your child or spouse gets sick in the middle of the month when you only have a few dollars for basic household needs, what do you do? If you had kept money for such circumstances as sickness you will not be running up and down seeking for help form family and friends
When the bread winner is Hospitalized
For those who earn wages only get paid when they work. In the event that you fall ill then no pay for that day and for the days you may remain bedridden. Where will you be getting money for food and medication from? Once more, emergency finances would have your back covered till you are able to go to work.
When business fails
Business is never a sure way of making money. You will make profits at one time and get losses at others. At sometimes, things go from bad to worse and you are on the verge of a closedown. If you could get money to save your business that would be a golden chance to turn things around.
A cushion for unpredictable economic tides
During wars and disaster like Iraq, 9/11 and the great depressions; global economies were adversely affected. People lost jobs and they could hardly afford to put a single meal on the table. These are times when some money you stashed away for emergency would go far to make your life and those of loved ones better.
Avoids risky debts
When financial emergencies occur, you become desperate. You are willing to take loans at whatever interest rates they may have as long as you will get out of the situation you are currently in. Once the bad tide passes, you will be left with a debt burden that will take you time before you can get back to stability. If you had some money for emergency you would avoid such risks.
If you never gave a deep thought for your emergencies, now you know better. Start today to save for unforeseen events that may crush your finances. You do not want to be kicked out of your home or go for days without food. Plan your future and be sure to handle tomorrow’s uncertainties.