Why the best time to establish an Emergency Fund is now.
Building an emergency fund is the first step in financial planning. The current coronavirus pandemic has brought to bear the need for every individual have an emergency fund.Everyone is likely to face a financial emergency situation in their lifetime.
An emergency fund can be used in case of financial emergencies. Here are some true financial emergencies for which emergency funds could be used.
Loss of Income: Loss of income due to job loss has become common following the coronavirus pandemic. The job losses are across several sectors of the economy. Aside the occurrence of pandemic, people can lose jobs through redundancies and during economic downturns.
Medical emergency: Medical emergencies for yourself and your family is one of the emergency situations people face. Not all health situations are covered by health insurance. The cost of medical emergencies which requires surgery can be a large proportion of an individual’s income.
Child emergency: Sudden increase in educational cost, change in policy requiring payment of school fees and other child emergencies can put a sudden financial pressure on parents.
Maintenance of asset: Breakdown of assets such as vehicles and maintenance houses.
While emergency funds are established to cater for emergencies, there is the tendency to use the funds for non-emergencies such as taking a vacation, having a wedding and replacing your car tire as a results of normal wear and tear.
If you feel your current income is too pressed to put some away in an emergency fund, there are a number of things you can do to raise money for your emergency fund. You can spend one or two evenings a week to work other jobs like driving an urber or teaching. You can also critically examine your expenses and try to cut some out in order to save. You can cut some bills such as paid TV or reduce the hours you watch television in order to reduce electricity bills and engage in activities which will bring you extra income. A well-funded emergency fund can save you in desperate financial situations. Talk to NIMED Capital for advice to start an emergency fund.