Phantasm
Banned
One cannot overstate the significance of an emergency fund in personal finance. A buffer, as a safety net, that gives peace of mind and prevents unexpected expenses or income shocks. Why is it so important to have an emergency fund? Here are several reasons why having an emergency fund is crucial:
1. Financial Security: Life has a way of being unpredictable thus emergencies can occur at any time. With an unplanned medical bill, sudden repairs for your car or loss of job, one should always be prepared with their own contingency plan i.e. the emergency kitty so that they do not get into debts that will strain them with high interest in return.
2. Stress Reduction: Having some financial back up takes off the burden during a difficult period in life. Instead of being concerned on how to deal with unforeseen costs you can focus on resolving them without worrying about your financial state.
3. Avoiding Debt: Many individuals end up using credit cards, loans or borrowing from friends and family when faced by unforeseen costs due to lack of an emergency fund. This may result in high cumulative interest charges and hence lead to financial stress over time. An emergency fund is there for you in order to avoid getting trapped into debts because it provides ready cash whenever required.
1. Financial Security: Life has a way of being unpredictable thus emergencies can occur at any time. With an unplanned medical bill, sudden repairs for your car or loss of job, one should always be prepared with their own contingency plan i.e. the emergency kitty so that they do not get into debts that will strain them with high interest in return.
2. Stress Reduction: Having some financial back up takes off the burden during a difficult period in life. Instead of being concerned on how to deal with unforeseen costs you can focus on resolving them without worrying about your financial state.
3. Avoiding Debt: Many individuals end up using credit cards, loans or borrowing from friends and family when faced by unforeseen costs due to lack of an emergency fund. This may result in high cumulative interest charges and hence lead to financial stress over time. An emergency fund is there for you in order to avoid getting trapped into debts because it provides ready cash whenever required.
