on March 19, 2019
Car repairs. Leaky roof. Family emergency. Sick kid.
When considering worst-case scenarios, the list goes on. Life is full of unexpected situations that are not only financially expensive, but emotionally tolling. While it is not necessarily healthy to dwell on these possibilities, it is important to let that list compel you to create and maintain an emergency fund.
Until a couple months ago, “government shutdown” was probably not on your list. Even if the recent government shutdown did not affect you or your family directly, it surely made you think, “How would I have managed if that was me living without a paycheck for 35 days?” Perhaps you spent a few moments trying to figure out where your money would come from during that time, where you could make manageable cuts, what you would not be able to sacrifice, and how big a hit you would take in total.
If you got nervous just thinking about this possibility, it would behoove you to begin setting aside some money in an emergency fund.
Here are three reasons to sustain an emergency fund for life’s unexpected expenses:
1. It’s not “if,” it’s “when.” There is no escaping the surprises that life has to offer. From car repairs to family emergencies, you are sure to face a significant financial event here and there. Be ready for it.
2. Emotional wellness. On top of these surprises being financially stressful, they pose emotional challenges. This is especially resonant if the situation affects your health, your daily life, or your ability to carry on as usual. If you can eliminate having to wonder where the money will come from, you can live knowing that you have a durable plan that has emergencies built in.
3. Lifestyle management. When faced with a significant expense in addition to your typical cost of living, you want to be able to maintain business as usual. This will ensure that you can continue to cover your basic needs, and it will help you feel steadier during financial surprises. During stressful times, the last thing you need is to feel like you cannot maintain a sense of normalcy.
Of course, we are not all facing 35-day income droughts; often it’s something simple like a home or vehicle repair that can make you realize how valuable an emergency fund is. This type of financial security benefits you during times of unexpected expenses in concrete, measurable ways. You will be able to cover your needs when they arise without drawing from sources not allocated for that particular purpose. Beyond that – and perhaps just as important – is the emotional security you gain knowing you have money set aside. Simply knowing that you will not be crippled by an unexpected financial event is reason enough to commit to creating an emergency fund!