Organising the family finances can be tough, but if you don’t have an emergency fund to fall back on it can be even harder.
An emergency fund is a stash of money that you have put to one side to cover any unexpected finances your family has to deal with in the future. If you don’t have one, you really should consider setting one up right now. Here’s why:
You could lose your job
The economy is in a period of uncertainty right now, largely due to the coronavirus pandemic. Job losses are happening in their droves and a lot of people are getting really worried about their future. In circumstances like this, having an emergency fund set aside is a real boon, It gives you breathing space to be able to pay the bills and put food on the table while you look for a new job. Ideally, you should look to save around 6 months’ salary in your fund, but anything you can spare will help you out if you’re hit by a job loss in the future.
Cars are expensive
If you’re a family who relies on a car to get to work, school or wherever, an emergency fund is vital. Whether you need to upgrade your Vauxhall Insignia so that it’s more family-friendly or have the engine repaired so you can continue to get to work, having an emergency fund set aside for just those kinds of things will help you to stay financially afloat.
You never know what will happen with your health
In the UK, we’re lucky enough to be able to access free healthcare from the NHS, but there are still things like dental treatment and glasses that may need to be paid for. Not to mention that it can sometimes be more efficient to pay for a private consultation. Having an emergency fund gives you the peace of mind that comes with knowing if you DO need to spend a little extra on keeping your family healthy, you will be able to do so.
Your pet may need help
If you have a pet, you really should have an insurance policy, but even if you do, most policies don’t cover every eventuality in full, and since average vet costs in the UK are £810, it’s sensible to have something set aside just in case. It would be awful to have to make treatment decisions based not on what’s best for your pet, but what you can afford!
Your home could fall apart
Okay, so it’s unlikely your home will fall apart but roofs often develop holes, pipes leak, windows get draughty, and well you get the idea! If you have an emergency fund set aside, you can perhaps avoid interest-charing home loans and do the work you need without having to get outside financial help.
The bottom line
The bottom line is, having an emergency fund gives you financial peace of mind. This is one instance where it is something money can buy!