Why you need an emergency fund

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Having an emergency fund is one of those important steps in being an adult that people often avoid. When you are young your money is for living and savings are for the fun stuff. The idea of saving money, just in case, is something most of us are not used to. Yet, it is extremely important. Read on to find out why.

If you get badly injured or sick, if your car dies, or if you lose your job, you need to have money to fall back on. If you don’t you will make a decision based on necessity. Taking the first job offered may not be the best option for you and sacrificing your best future because you didn’t plan for this outcome, is your fault. Have some savings in place so that if you do need to change your job you can take your time and choose the right one. 

There is an important distinction between an emergency fund and other savings. You must make a rule with yourself that you can not use that fund for other things. The moment you see a great deal on a short vacation and decide to borrow from your emergency fund is the moment it no longer is one.

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Most advisors say that you should have between three to six months of living cost in savings in your emergency fund to ensure you are covered for most scenarios. Start small if you have to, even $1000 will see you out of most difficult situations but add to it every week to ensure if something really goes wrong, you are able to deal with it.

You can’t go through your life assuming everything will be ok. At some point, somewhere, something will go wrong. Successful people are not those who have never had bad circumstances, they are those that dealt with those circumstances in the best way.

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