Emergency funds aren’t just some “grown-up” myth.
They’re a financial safety net for everyone, no matter how old, rich, or “laid back” you think you are. Don’t believe us? Here are six reasons why every single person could use (and should have) a safety net.
Support Your Life Transitions
Life is change. You’ll move to a new apartment or go back to school. You’ll take a chance on love and move to a new city to start over. It’s important not to shy away from these things, but they’re much easier if you have something to bail you out if things go south. That’s exactly what emergency funds are designed for.
Reduce Stress
Think about all the days you drove yourself to exhaustion with worry. Stress messes with your head, your energy levels, and your ability to make informed decisions. Knowing you have backup cash makes the “what ifs” less scary. It’ll also make you less likely to make choices you might later regret out of desperation.
Protect Against Job Losses
Some life transitions aren’t planned, and one of the more unfortunate ones is losing a job. Nobody’s job is 100% safe, and that couldn’t be more true right now. Emergency savings will prevent you from scrambling to take just about anything to pay the bills. It gives you breathing room to look for something new (and hopefully even better).
Stop Debt From Eating You Alive
Most people will stretch their credit cards a little further than they should. It happens when you’re going through big changes, and it can be an excellent way to achieve peace of mind if you have a game plan for paying it back.
Unfortunately, life doesn’t care if you have too much debt; it can still throw something your way that will put you even further in the hole. Emergency funds make it so you can avoid debt in the first place and dig yourself out of the hole when these situations arise.
Gain Independence
Starting an emergency fund is an enormous and necessary first step toward financial independence.
There’s no hoping friends and family will say yes to your pleas for cash, no dealing with predatory loans that are preying on your downfall, and no lack of confidence to make decisions that will put you on the right track. It’s an immense boost to your mental fortitude, and that’s something you can enjoy at any age or tax bracket.
Cover Medical Expenses
Medical expenses feel like something you only have to “worry about” when you’re older. But that’s only because many people take their good health for granted. The reality is that medical emergencies can happen when you least expect them, just like anything else on this list.
Even with insurance, surprise bills are a thing, and having an emergency fund makes them a thing you don’t have to worry will break you financially. You can instead focus on getting better and replenishing your emergency fund!
