Emergencies do happen and they come unannounced most of the time. Think of a situation where you suddenly lose your job and are of course required to pay your bills. A situation where you fall ill and are supposed to seek urgent medical attention. think of an accident or scenario where urgent funds are required to save a situation, all these are situations that require ready money to solve them.
The need for emergency funds cannot be overemphasized; it is highly advisable to have them in place to avoid some ugly situations. Here are three reasons why you should have this fund set up right away:
Helps reduce stress when an emergency happens
Given that emergencies occur and most times come unannounced, having some funds set aside for this purpose will not only give you peace of mind, It will help you handle the situation better. When an emergency happens and you do not have the money, this can be the start of your problems. You can develop stress as you think of how to raise funds to meet the emergency situation.
When you have some money set aside for emergencies, you will be able to respond to the situation immediately. This means that the problem will be solved on time. There are some things that cannot wait and that means an ugly situation will be saved. Things that would have worsened due to failure of immediate response can be avoided. More losses which would have been as a result of slow or no response will be eliminated.
It leaves intact your savings and investments
An emergency fund means that you have adequate money to respond to urgent situations. You do not have to go borrowing from friends or loan providers to meet the needs. This means that you have avoided interest charges that come with borrowing. You will also not be required to use your savings to pay for the emergencies; neither will you be required to sell your assets or investments.
An emergency situation can leave you stressed, worried and weak but when there are enough funds to cater for the costs that arise, these negative reactions can be avoided. This stresses the need to save for emergencies, it will save you great pain and loss.
Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.