Here’s Why Having an Emergency Fund is Important

Lost your job due to the pandemic? As depressing as it sounds, there are lots of people experiencing the exact same thing that you do. And while your current situation may trigger you to rely solely on your emergency fund or savings for your daily needs, there are some who are left with literally nothing to sustain themselves with.

There are people who can put off their job hunt to a later date until it’s safe to go outside and travel, but there are also those who can’t. The latter may have dependents to support or overdue bills to pay. This stresses the importance of saving money for unforeseen events. Because if you are not prepared for these types of challenges in life, you are sure to find yourself in a tight spot. Here’s why having an emergency fund is important:

• An emergency fund enables you to sustain yourself even if you lose a job or an unanticipated event comes up, requiring money to cover.
• Can cover not only long periods of unemployment but also medical, home, and miscellaneous emergencies.
• Save at least three (3) to six (6) months’ worth of salary in your emergency fund to cover long-term problems that might arise.

So, if you want to start an emergency fund in case something happens again, we’ve put up a list of tips you can note:

1. Re-check your spending habits.

Make a run down of your expenditures. If you are spending money on less important things, you may want to save that for future uses instead. By doing so, you are avoiding the risk of getting broke.

2. Commit to saving.

Once you start saving money, commit steadfastly to it. We all know saving is difficult especially when you really want to buy something. But don’t fret, you will definitely gain from this endeavor in the future.

3. Secure the money.

Shun the thrill of purchasing things you don’t need by securing your money in a bank. If possible, create a separate account for your savings or funds so you won’t be provoked to spend it. 

4. Keep the extras.

If your salary sustains your current lifestyle just enough, save any extra money that will come your way. It can be bonuses, pay raises, or tax refunds—any money you don’t need for now. Secure it in a bank and ensure to not spend it unless necessary. If you find an account that earns interest, that’s even better.

5. Budget wisely.

This is among the best saving tips you should note: make savings a part of your budget plan. This will help you avoid clinging paycheck to paycheck just to get through. Sure, adjusting is difficult at first, but you must bear it for the future.

Allotting money for emergencies benefits you in lots of ways. Aside from sustaining your lifestyle, you can also rid yourself of stress by knowing you can back yourself up. Moreover, having an emergency fund helps you and your family live a less-stressed life in spite of the circumstances you are in. So, when other family members or friends ask you for monetary help, you can aid them without any hesitation.

Photo by Michael Longmire on Unsplash