Being independent, having a job and earning a living is a great feeling for every girl. But what do you do when you get your paycheck every month? Pay your bills, rent, run to a mall for those must haves, and finally end up with very little to save, which is also consumed in the last few days of the month.
Then, how do you plan for emergencies and difficulties? Do you wish you had a crystal ball and had known your future, to be prepared for it, or do you end up compromising, or borrowing, or depend on credit cards for these unforeseen situations?
This is when we wish we had a saving, and here comes the need for emergency fund. In today’s unpredictable world, not having an emergency fund is like driving your car without insurance.
Why Emergency Fund?
An emergency fund is for any kind of crisis, think of all the people who never expected to get laid off from their jobs, or are ruined financially due to an accident or illness, or for sudden expenses like home and auto repairs, or something that we have never dreamed of. While this fund may or may not suffice the complete need of the moment, but this surely provides us a financial buffer. It also gives you time to take steps to meet the situation.
Secondly, it prevents our financial situation from worsening further. Other options of fulfilling the immediate requirements, like credit cards, loans etc put up an additional pressure on our finances, in terms of interest rates.
Thirdly, it shields our investments and saves us from incurring losses due to breaking your investments which in turn can upset our entire financial planning.
How to Start and Continue With an Emergency Fund?
With so many tempting reasons to start saving immediately for an emergency fund account, there are a few points to remember to sustain the same.
One should not confuse an emergency fund with other investments and insurance. This is accumulated in addition to our regular savings and only to be used in real emergencies no matter how tempting it is to dip in for that gorgeous dress or shoes you are eyeing for. The very purpose of creating an emergency fund gets defeated in such a case.
Also make sure that the fund is easily accessible at the time of need and remember to replenish it after every time you use, as soon as possible. This way, your safety net will continue to remain in place.