One of the most important pieces of financial advice around there is to start an emergency fund. Most people are aptly aware of it but still choose to do nothing about it. They are not sure how to start an emergency fund. There could be many reasons for this as to why no one has acted on this advice yet.
But, because of this over a third of Americans are unable to pay for unexpected emergency expenses, as their savings is simply not there. There is a lot of reasons to start an emergency fund today.
How to Start an Emergency Fund
Starting the Fund
There are strategies and various reasons behind starting an emergency fund. You’ll need to stack away a good amount of money to get started. The smallest of things can become a major expense if you’re not careful about it.
Unfortunately, many people are living paycheck to paycheck. With this said in the event of a job loss, they are going to be in a lot of trouble. Losing your job is one of the primary reasons to get an emergency fund in the first place.
An old rule of thumb was to have savings that could cover the next three to six months of expenses. While this might have worked back when it was more feasible to find jobs, the current price point is somewhat outdated. You’ll want to build up an even bigger reserve. For people who don’t even have the minimum, this can cause a huge problem.
Luckily, as a way to help you save during that downtime, you can turn to low free-risk loans. View the King of Kash for details as it can provide major ways for you to get an infusion of cash when you need it the most.
They don’t take into account credit scores and do not require any down payment of some kind of collateral. Instead, they use their large growing presence and history to provide hundreds to thousands of dollars. This could be just what you need between those unemployed months.
Unexpected Primary Expenses
A trip sent packing to the emergency room at the hospital will really begin to add up if you’re not covered with health insurance. Even if you are insured you’ll still be liable for covering a certain amount of your own costs. If you’re usually healthy most of the time, which a lot of us are, you’re not worrying about getting sick until it is too late.
If this was to ever happen it is likely that you won’t have enough money in the bank to cover your new unexpected medical expenses. With any limited amount of funds you do have and decide to use there is the possibility that you’ll also need to pay the rest out of pocket.
Along the same vein of expenses comes a major dental expense. A stray wisdom tooth might pop up or you may require some internal rerouting due to decay or other teeth problems.
It also isn’t only you that you must look out for. For anyone that owns a pet may need to burden the cost if his or her dog or cat gets sick. There are pet insurance policies out there that you may not have known about that can help, but extra expenses will still apply even with that.
Repairs and Upkeep
Everyone has seen a sudden emergency when their car stopped working or acting funny out of nowhere. Sometimes the cost of repairing or replacing something isn’t going to be covered by a credit card or small amount of funds you may have. Instead, you’ll need to tap into that reserve amount of money and pay off any potential damages. These may have incurred on your car through years of wear and tear.
It isn’t only your car that will need unexpected fixes. Houses can be a major cause of concern. Again you’ll have homeowners insurance to cover some expenses, but this simply cannot cover everything. High deductibles and bigger problems will not be covered all off of insurance or someone else’s money. The burden falls on you to provide the money to rebuild, renovate or fix a flailing element of a home.
Overall, these are only scratching the surface in terms of what an emergency fund may have to cover. For the majority of Americans with no funds at all, they can’t even begin to fathom an emergency occurring. The best time to start a fund was yesterday; the second best is right now.
Sebastian Barton is a Dad who was made redundant several years ago; living off of credit cards with no savings, Seb knew that things had to change and quickly. He is now financially fit and shares his tips and must-do items with an online audience through his articles.