Don’t have an emergency fund? Discover 3 reasons why you should

No one likes to receive an unexpected bill. Whether it’s sudden repairs on your car, a replacement washing machine, or your benefits have been incorrectly calculated and you now have to pay the money back. It doesn’t take much for our finances to be thrown into disarray, leaving us at the mercy of credit cards, borrowing and even more debt.

It can happen to anyone, which is why it’s important to work an emergency fund into your monthly budget. Saving for a rainy day is vital, especially when you have children to provide for – click here for the latest information on Junior ISAs to start investing in their future. Having an emergency fund in place can help you keep your head above water, should your finances take a turn for the worst.

Here we’ll explore 3 reasons why you should have an emergency fund.

You might lose your job

These days everyone is worried about the security of their jobs and the stability of their careers. Thanks to the economy, an illness, an injury, covid-19, downsizing etc there are plenty of reasons why we could wake up tomorrow and wonder where our next paycheck is going to come from. Therefore building an emergency fund is crucial.

If you were to lose your job tomorrow, how would you pay your bills? Cover your expenses? Or put food on the table? It may take you a while to find another job or one that pays the same as your old one. This is often when people use their credit cards to get by, plunging themselves into more debt. Having an emergency fund in place means at least some of your expenses will be covered and you won't have to rely on borrowing to keep you and your family financially stable.

Sudden medical or dental bills

If you have dental and medical insurance, then you can expect some coverage at least. But if your insurance doesn’t cover you for certain treatments or therapies then you might be expected to foot the bill. Or if you rely on a healthcare service, you may need to go private due to long waiting times or a lack of other options.

A well-stocked emergency fund will have you on the road to recovery in no time, and you won’t have to worry about those rising medical bills giving you more time to focus on your health and wellbeing.

Unexpected home repairs

What’s that dripping noise? Why is the heating not working? The toilet is overflowing! Unexpected home repairs come in many shapes and forms, but they all have one thing in common – they’re expensive.

Rather than plunging yourself into more debt by borrowing money to have the repairs completed, an emergency fund may be able to cover some of the cost, giving you some much needed financial breathing room.

Final thoughts…

Essentially, an emergency fund is something we should all have. It works as a safety net between our finances and debt. So, if you don’t have an emergency fund, start working one into your monthly budget now!