Having an emergency fund is important for so many reasons. Not only can it keep you out of debt or add more debt, but it can give you peace of mind in your day-to-day life. There are five important reasons to have an emergency fund.
An emergency fund can keep you debt-free or keep you from adding additional debt. If you have money saved aside for an emergency then you don’t need to touch a credit card or take out a loan to cover this emergency.
An emergency fund can also provide you with peace of mind. Knowing you have a certain amount saved for a rainy day can help you sleep at night. Learning how to be less anxious about money is important and an emergency fund can help you with that.
Another important aspect of an emergency fund is that you can cover emergency repairs on your home, car, phone, or other things. It’s important to keep these things in good condition and having money aside for when you need to repair your roof or replace your brakes is important.
If you were to lose your job, an emergency fund should be able to cover your monthly essential costs for at least 3 to 6 months. Even if you don’t think you will lose your job, we have seen these past two years that anything can happen to turn out lives upside down.
Finally, if you have a medical emergency, your emergency fund can be used to make sure you don’t go into medical debt. You also may be more inclined to treat a medical issue if you have the funds saved up