Your emergency fund protects you financially, just a your seat belt protects you physically. You may rarely need it, but when you need it you’ll be glad you were prepared.
It is a Necessity. You wear a seatbelt because you recognize the danger you’re in without one. It’s not a fashion accessory, but it is a protective device that reduces injuries and saves lives. Shifting over to finances, What about your emergency fund? Your finances are in danger if you don’t have one. Setting aside liquid cash in a saving account is not flashy, but it is a necessity.
Don’t Wait Until It’s Too Late. Accidents happen in the blink of an eye, and often our unexpected expenses happen quickly as well. Just like your vehicle’s seat belt, you may rarely need it, but when you do, there’s no time to put it on, which is why you need to fund your emergency fund before the crisis happens. One day your home’s heater is working fine and the next day, it’s blowing cold air out at you in the middle of February. One morning you wake up with excruciating tooth pain, and your dentist advises a course of antibiotics and a root canal. The list goes on and on. What personal examples could you add to the list?
Save your Finances from Serious Injury. In a time of need, your emergency fund will help you avoid serious injuries to your personal finances. Use it to avoid the discomfort and relationship issues that often come from seeking financial help from friends or family members. It will keep you out of or reduce your dependency on high cost debt. $1,000 borrowed on a credit card at 18% interest, making a minimum payment of $50 a month will take you TWO years to pay off and cost you $200 in interest. What’s the chance that another emergency will come up in the two years it takes to pay off the last emergency? It’s pretty likely. This is why, sadly, those without an emergency fund often find themselves in a cycle of debt.
How We Think Influences Our Actions. I hope that visualizing your emergency fund as a seatbelt–a highly protective necessity–will encourage you to start or build your own emergency fund. Today. 🙂
Photo Credit: sam-rudkin-millichamp- via unsplash