Five Reasons You Need to Start an Emergency Fund ASAP
Thursday, May 8, 2014, 1:00 AM | Leave Comment
Emergency funds are a way to protect yourself and your family in times of crisis. Below are five important reasons to start one right away.
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Provide security for yourself and your family in the event of a job los
The primary reason financial emergencies occur is job loss. Many times it’s difficult to find employment immediately after the loss of a job, especially if it’s unexpected. However, bills and hungry mouths still need taken care of during unemployment. This is why it’s a good idea to have between three and six months of living expenses in an emergency fund.
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Give yourself back up funds in case of a medical emergency
When a medical emergency happens, recovery can be strained by worrying about paying for medical bills. Even if it seems daunting to save up enough to cover any medical emergency, it is better to save some amount up than to pretend that medical emergencies won’t happen. Everyone is prone to accidents and all accidents have the potential to be medical issues.
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Avoid withdrawing from retirement funds
Sometimes people in financial emergencies find they need to withdraw from their retirement funds to cover their bills. Your retirement is there as a cushion after you are finished working, not before. If you don’t replace the funds you remove, this can cause you issues in the future. Finally, taking money out too early from retirement funds can cause tax penalties.
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Lower stress and worrying about financial instability
By lowering stress, you are allowing yourself and your family to live healthier lives. If you are married, emergency funds can eliminate arguments with your spouse over monetary issues. All of this adds up to a happier life for those around you.
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Emergency funds let you make and keep good investments
You won’t always know when a good investment is going to appear, but you can always be ready with an extra fund to bank on. The flip side of this is not needing to lose good investments by selling in a bad market for monetary support.
These are only a few of the reasons to start an emergency fund as soon as possible. If you are still unsure about the benefits a fund like this could provide, look into financial counseling. For example, D. Thode & Associates Inc. provides free consultations and can help with bankruptcy and financial counseling. Protect yourself and your family today by starting an emergency fund.
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