Emergency Fund Economic Uncertainty Job Losses Sickness and Injury Home Repairs Food Costs

While we all hope for smooth sailing, life presents challenges and often tests our ability to face those challenges bravely.

Few people are prepared to handle the sudden emergencies that arise from time to time. A job loss, a serious illness in the family, home repairs and car breakdowns leave many scrambling to address the emergency. Too often the only recourse is to use credit cards to solve the problem. Unfortunately, this method only adds to financial headaches.

An emergency fund is meant to handle those special situations that affect every family during the course of life. If you have been salting money to meet potential crises, you only need to know when to use that money. Some situations are too easily considered emergencies, but often can be handled without digging into the emergency fund. 

Help Cover Job Losses

An emergency fund is meant to cover those weeks and months of unemployment. Finding work is a lot easier without the worry of meeting debts while unemployed. there should be enough cash in the fund to cover at least six months of unemployment.

Sickness and Injury

Illness can strike anyone. Hospitalization, drug treatments and rehabilitation can add up to thousands of dollars in medical expenses. Medicare may not be enough. An emergency fund helps to add extra support to any insurance coverage you may have in the case of accidents or disability.

Auto Replacement and Repair

The cost of changing oil and new tires aren’t reason to dig into your emergency fund unless you need the car to find employment.

If your car breaks down on the road, you need the help from your emergency fund to cover the towing fee and repair costs. A collision may require weeks in a body shop during which time you need to rent a car to get to work. The emergency fund applies, but it is not the excuse to rent a limo or a sports car. Your emergency fund can help to defray the costs of a new vehicle, though you should have enough money set aside to pay any loan you need for that vehicle.

Home Repairs and Maintenance

The home is your biggest expense. Those leaks must be fixed and the drains cleared out. Pest control require the services of a professional exterminator. Broken and cracked toilets and tubs need to be replaced. Storm and wind damage to the exterior of the house need to be fixed. That’s where the emergency fund can help fix what home insurance may not cover.

Support for Food Costs

If money is tight, you still need to eat. There’s no shame to use some of that emergency money to buy the staples you need to feed yourself and your family. The same can be said for paying for utility costs when there isn’t enough in your regular budget to pay them. If there are no other sources of money, the emergency fund can continue to keep you warm during cold winter months and keep the lights on.

Help for the Community at Large

Earthquakes happen. Tornadoes and hurricanes can level homes. If you have been lucky not to have had to handle an emergency for years, some of that money can go toward charity to help someone in need. You would do a great service to your community and establish an honorable reputation in the eyes of the less fortunate.

These are all good reasons for having an emergency fund. The sooner you start, the better prepared you will be when those emergencies arrive.