If you are not ready for a financial emergency because you do not have an emergency fund set up, you are not alone. However, you will change that starting today. Not having enough money in savings to bail you out when there is an emergency is a very dangerous way to live. Your future after a financial emergency can be bleak if you are depending on credit to bail you out. When you do not have enough savings to hold you over during those emergency situations and you must depend on credit, you are prolonging the emergency because you must keep paying for it long into the future… that is if you even have a line of credit in the first place. Emergencies can upset your budgeting and planning but how long they linger is entirely up to you.
What Can Go Wrong?
No matter how well you are budgeting your paycheck if you do not have an emergency fund set up you are in a risky situation. Unexpected expenses crop up all the time. Some are worse than others, but they rear their ugly heads all the time. An emergency fund protects all the hard, budgeting work that you do. Some things that can send your budget unraveling if you do not have an emergency fund set up include:
- Medical Expenses
- Home repairs
- Car Repairs
- Insurance Deductibles
You just never know what life holds. It important to be prepared to handle unexpected medical costs, temporary unemployment, emergency home repairs, emergency auto repairs and dealing with insurance deductibles so that it doesn’t affect you right now and or in the future.
Your Credit Caregiver recommends having three (3) month’s salary saved which is a great goal to shoot for. If you are not there yet, we will start small by putting just $1000 to the side. This will give you a sense of peace. If you already have your emergency fund started, good for you! Now, set a goal to make it to the 90 day emergency expense fund mile marker.
Being prepared for the worse that life can throw at you is an excellent way to build personal wealth, reduce stress and improve your quality of life. Learn to pay yourself first and then create a budget around what is left. Chiseling away expenses and making your peace of mind a priority will make it all worth it.
The goal should be to have enough money saved in an emergency fund that life’s upsets are not quite as upsetting as they could be!