You may have heard stories about families who have become desperate because no money was set aside to tide them over during a crisis.
Having money set aside for desperate times or emergency situations is a must for everyone, especially for those who have families to care for.
Without sufficient cash, you might be constrained take out a loan or even use retirement money just to foot unexpected bills that seem to grow by the day.
The importance of keeping enough emergency funds should not be discounted, especially during these desperate times when having money matters a lot.
A lot of households rely heavily on regular paychecks to keep a healthy and manageable family budget. So if this consistent source of income is suddenly curtailed, having enough money stashed in a savings account could help tide you over.
In 2015 alone, the average duration of unemployment in the U.S extended to about 29 weeks. Based on this figure sourced from a statistics portal, savings equivalent to eight month’s worth of family expenses can be a good starting point.
Health issues needing emergency care can be a burden to a family. The importance of having enough cash to settle hospital and related medical bills can never be understated.
Even if you have a Flexible Savings Account (FSA), not all medical expenses are eligible or covered by this. Additionally, children who are past the age of 26 years of age at the end of the current tax year do not qualify under the FSA.
A family emergency such as death or a serious illness could force next of kin living far from home to travel the distance and be with grieving family members. Last minute purchases of airline tickets could drain one’s pockets as some airlines do capitalize on travelers who book quite late. If you had access to emergency funds you could have used this to pay off the ticket and be spared of ballooning credit card bills due to high-interest charges.
Damage to Real Property
While property damage requiring emergency home repairs are guaranteed by insurance firms, there are limits too as regards items they are willing to cover. These are out-of-the-ordinary catastrophic events which typical insurance policies don’t cover without added premium.
Recognizing the importance of having enough emergency fund for life’s emergencies is a must for everyone. Do not wait for desperate times to happen before building one.