Some Reasons That Make an Emergency Fund Very Important in Personal Finance
Hello friends, we have read a lot in the series of personal finance, now we have learned about the flow of money, we have also studied the rules of personal finance in detail, we have read about the budget, We also learned what the 50/30/20 rule is, we learned about saving and investing, we also learned how to reduce our expenses. And we have also read about what is an emergency fund. And through today’s post, we will read about the need and importance of emergency fund.
Emergency Fund Very Important in Personal Finance :- The first thing you need to know is that it’s just a savings account that exists to keep you out of trouble. If something terrible happens, like losing your job suddenly, having a fund will give you peace of mind so you can focus on fixing the problem instead of worrying about how to get through it.
The second thing you should know is that your emergency fund is based on how much you can save. Every month, not everyone can save the same amount of money, and that’s fine. But a good rule of thumb is to have enough money for six to twelve months of expenses.
I know it sounds like a lot of money, but keep in mind that you can pay it off in small amounts over a certain time. If you start small, you’ll save a lot. A good start is to open and put money into a savings account between 5,000 and 15,000.
Breaking it up into smaller amounts is a great way to make saving less stressful, and once you have a little bit saved up, it will be nice to know you have a safety net.
For the financial security of your family, you need an emergency fund. No one can save enough money to pay for all of his bills if he loses his job, gets hurt, or gets sick. You could lose your house, your car, your insurance, and other things. Because of this, everyone needs to set up an emergency fund to make sure they have money if they need it. Emergency funds have these benefits.
A person may regulate their tension with its help. It seems to reason that living in a state of emergency puts your financial security at risk and stresses you out. Without any kind of backup plan, you’re always on the verge of losing everything financially important to you, hoping beyond hope that you’ll make it through unscathed. If you have an emergency money set up, you won’t have to worry about how you’ll pay your bills if anything unexpected happens.
Most of us do have health insurance, but it doesn’t cover enough, like lost wages, benefits, and so on. If you have an emergency fund, you can get the best care because some hospitals want to be paid ahead of time.
Remember that it’s always a good idea to plan for the future because you never know what life will throw at you. Ben Franklin once said, “If you don’t prepare, you’re planning to fail.” I’d like to bring that quote up again. So, don’t forget to save for emergencies and have peace of mind.
Don’t go to the trouble of getting a high-interest payday loan and putting up your securities just to get by
Look friends, debt is like a bad disease in your life, if you treat it properly, it will end, but if you make a slight mistake, it keeps troubling you for the whole life. What I mean to say is quite simple, that if you have some money in the form of emergency fund, then you will not need to go for expensive loans even in times of crisis. So that’s why every person should keep some amount of money in the form of emergency fund.
No need for financial support
Friends, often we see that someone is going through any kind of bad time. Or struggling with lack of money, then we either borrow money from our relative or any of our friends, but we delay in repaying the money, then gradually this borrowing creates a rift in our friendship or relationship. Makes it
So this is my advice to all my friends that you should always avoid borrowing in relation or friendship. Still, if you are in dire need of money, you don’t get any help from anyone, then you can take it. But you have to repay the loan on time. So that the friendship also remains.
You will avoid high-interest funding
Unlike a renter, you are responsible for repairs and maintenance on your own property. Some repairs may need to be done right away, like a big roof leak in the middle of summer, a broken window, or a broken heating, ventilation, and air conditioning (HVAC) system. If you don’t have the money for this expense right away, some repair shops offer on-site financing, and you can often apply even if you have bad credit. But the problem is that the interest rate on this type of loan is much higher than that of banks and credit unions. If you have some amount saved as an emergency fund, you can save yourself from this type of stress.
Peace of mind
When a difficult time comes upon us, we become insane, our head starts bursting with thoughts, and in this situation we cannot take any right decision at any time. And in difficult times, without thinking anything, we get trapped in such a debt cycle, that we are not able to get out of it.
On the other hand, if we had money in the form of emergency fund, we would think about the solution of our problem with a cool mind without worrying about money. Which is always in our interest. That’s why emergency fund is also responsible for peace of mind.
Author Of Solvefinancewithca.com
Hi, my name is Sandeep Mittal and I have been working as a Chartered Accountant in the finance industry for the last 5 years. With my experience, I have gained knowledge about various aspects of finance, such as financial planning, investment strategies, taxation, and accounting.
I am passionate about finance and I want to help people achieve their financial goals. So, I have started a blog called “Solvefinancewithca”. Through this blog, I will share practical advice on finance-related topics like personal finance management, investment planning, tax planning, and accounting best practices.
My goal is to provide solutions to common finance-related problems that people face in their daily lives. I want to make finance easy to understand for everyone and provide honest and impartial advice that is tailored to the needs of my readers.
In summary, my blog “Solvefinancewithca” is about sharing my passion for finance and helping people make informed decisions about their finances.