Top Reasons Why Emergency Funds Save Lives

Odd Cents - Top Reasons Why Emergency Funds Save Lives - Foodica

It’s a fact that emergency funds save lives. Mine has saved me too many times to count and I know that I will lean on it again at some time in the future. In the past I’ve outlined steps on how you can create an emergency fund  and I’ve made it a habit to post about them on social media to remind my readers and followers that they are worth it.

I’m not sure that many people truly understand how beneficial emergency funds are. Emergency funds are often touted as one of the personal finance bucket list must-dos and I think that we just jump on the band wagon without fully appreciating the reasoning behind the phenomenon. So, to keep that train going, you need an emergency fund because there are several benefits that you will enjoy.

Five Reasons Why Emergency Funds Save Lives

Saying that emergency funds save lives is not an exaggeration. Ask the Browne family, who was featured in an earlier personal finance case study about their emergency funds. That family was able to use their emergency fund to help them through a financial crisis that started with a job loss. Even though it was rough, this family of four was able to survive, especially when the cheques stopped and the bills kept coming. You can also find more examples of people who survived because their emergency funds were well funded.

Here are five reasons why emergency funds save lives and why you should start yours now.

1. You Can Cover Unforseen Medical Expenses

Healthcare is not what is used to be and unless you have health insurance, unexpected medical costs have to come out of your pocket. Nobody knows with exact certainty when or where a medical emergency will occur. You can use your emergency fund to cover at least some of the costs for an unforeseen medical expense.

2. You Can Relax in the Face of Adversity

If your emergency fund is well funded and you have an emergency, you can rest comfortably knowing that you can deal with the problem. Not much is mentioned about financial issues and stress, but it’s a fact that they both go hand in hand. Knowing that you are financially prepared for any unexpected event, is a worthy comfort.

3. It Can Keep You Out of Debt

If you’re in a tight financial bind, your emergency fund can be beneficial when you are aggressively paying off your debt. When expenses pop up, you may be tempted to rely on your credit card, which will push you further into debt. However, if you have an emergency fund, you can use the cash in the fund to cover the unexpected expense.

4. You Will Build Up a Savings Buffer

If you are lucky enough to have an emergency fund that you’ve never touched, you should have accumulated some serious savings. If your emergency fund is enough to cover your expenses for at least one year, then you should think about moving the excess money to a high interest savings account or investment vehicle.

5. It Can Keep You Going After a Job Loss

These days, job security is becoming hazy myth from the past. No job is secure and even though your position seems very important, there is no telling what could happen. If you lose your job, your emergency fund will allow you to continue paying your bills. Bills do not stop when you lose your job.

Your emergency fund can keep you afloat when everything else around you is sinking. Don’t take your good fortune for granted. Contribute to your emergency fund. Who knows? It may save your life.

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