An emergency fund is money you set aside for when an emergency upends your world and you need money to do what needs to be done. Your emergency fund should cover three to six months of expenses. Emergency funds should be held in an account where you can access them fairly quickly. Here are reasons why you need to kick start your emergency fund now.
1. Income loss
Your source of income is not necessarily a given or secure. The organisation or company you’re working for could close down or the company could be cutting back on some of its employees and these are often unforeseen circumstances. If you’re an entrepreneur, you could also see some rainy days in business and an emergency fund would be present to cover you in the in-betweens. This would help one be secure and unstressed during such times.
2. Medical emergencies
Medical emergencies are bound to arise when you least expect them to. These emergencies definitely have to be attended to whenever they arise; the challenge with these kinds of emergencies is they may be very costly. When one is unprepared and has no fund or health insurance set up, this kind of thing may take a huge toll on one’s finances and take them months to recover. All this can be avoided if one has an emergency fund set up – as it would be able to take care of the expense when it occurs.
3. Child and/or family emergencies
Whether married or unmarried, we are all bound to have family emergencies. These emergencies are often unseen, it could be a sickness – payment for contributions for a family wedding that cannot be foregone etc. An emergency fund therefore becomes very helpful to cover these unforeseen costs.
An emergency fund can help you look forward to the future without worrying about being unprepared for unexpected expenses. Ready to start your fund now?
AUTHOR:
SheVestor Africa is a pan-African digital community that empowers young African women with financial knowledge to hone their financial skills. Our vision is to contribute to economic development by equipping young African women with financial knowledge and skills, connecting them with personal finance experts and becoming the #1 digi-sphere for financial resources, Inspiration and expert advice.
