Having an emergency savings account is a must if you hope to keep yourself afloat when things go wrong. No one plans for life to go a little askew, but it does happen with job loss, injury and unexpected breakdowns with the car, the boiler and any number of appliances.
As you well know, breakdowns and life issues always seem to happen in three’s, which means that you need to have a savings account that is prepared for you to use it – just in case.
When life does go off kilter, you need to be prepared. It’s hard, though, to prepare yourself for something that hasn’t yet happened. You can’t exactly predict that the established business that you work for is going to fold. You also can’t tell whether you’re going to be a victim of an injury this year. The good news is that you can do something, just in case.
You can figure out how much you earn in six months and make this your emergency savings figure. This is the amount that you can hold in your savings account ready to cover you when life goes sideways. There are many things that your savings can cover, and here are four ways to get started with your emergency fund below:
1. Medical Costs. You may have comprehensive medical insurance and coverage, but that doesn’t always cover everything. Sometimes, you have to pay out for things like glasses or a Starkey hearing aid. You may even have to cover the cost of crutches or a wheelchair.
Your emergency savings account can really get some use out of it if you are strapped for cash and your medical equipment breaks down; it means you can be rescued!
2. Home Appliances. Being a homeowner is a wonderful privilege, but it does mean that the buck stops with you. When the boiler decides to die in the dead of winter, it’s you that has to cover the costs of a new one, plus installation and the cost of an engineer. It’s not cheap, but it’s a great way to use the emergency stockpile that you’ve got to cushion you from a fall.
3. Pet Sickness. You have a dog, one that costs you enough in food, medical insurance and toys every month. Now that dog has a broken leg, and you’ve got to fork over the money to get him sorted out. You’d usually not dip into your emergency savings for this, but it’s an emergency procedure or the dog loses a leg. It’s a perfectly legitimate reason to use the account – so go for it!
4. Repairs. The one thing about living in your town is the climate – it’s unpredictable and you can’t tell when the weather is going to turn on you. The wind is strong enough without the roof being ripped off and costing you thousands in repairs. Emergency funds are there for things like this, especially if your card won’t cover the cost!
An emergency fund is for emergencies; it’s the literal definition. Always try to replenish it as fast as you can when you have to use it!
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