You wake up on Tuesday and remember you need money for gas. You drained your bank account last Friday when they collected for Love Your Boss Day at work.
What do you do?
You can join the club of American adults who don’t have a single penny saved for a rainy day.
If we could show you why you need a stash of cash, would you be more motivated to save? If you’ve never thought about creating a fund for emergency money, here are 8 reasons why you should.
- You Lose Your Job
With the unemployment rate hovering under 4 percent, losing a job may not be your biggest worry.
Humor us and pretend for a minute your boss calls you in for the dreaded talk. Calculate how long you can stretch that last paycheck. Then estimate how long a job search might take.
Experts claim a job search directly relates to the desired salary. For every $10,000 in pay, the average job seeker spends one month beating the pavement—or the keyboard.
At one time, a person felt secure if they had enough in their piggy bank to cover 3-6 months of expenses. That may no longer be enough.
With enough savings, you could meet expenses and take your time finding the perfect new job. Without emergency money, you might need to be less selective. Or ask Mom and Dad for a loan.
- Betsy Won’t Budge
The need for an emergency cash fund doesn’t have to be as dramatic as the unexpected firing. Something as simple as a dead battery can put a halt to life as you know it.
Unless you live in a city where driving isn’t the most practical mode of transportation, your car is your lifeline. Even if you have other options like a taxi service or the bus, they’re expensive.
If your car never breaks down because you maintain it, good job. What would you do if you had a car accident and totaled your vehicle? Insurance never covers 100% of the bill.
You’re on the hook at least for the deductible. Depending on your policy you’ll pay between $500-1000. And if you don’t have rental car coverage, you’ll pay for that too, or end up carpooling.
- Your Partner Gives You THE News
Well, you didn’t see that coming, did you? An even bigger surprise than the stork’s calling card is how much that adorable little bundle costs.
By the time a baby arrives, they’ve already racked up roughly $30,000 in medical bills. If their parents have insurance, things look a little brighter. They’ll only pay on average, $3,000 in out-of-pocket expenses.
Once the baby arrives, it needs at the least a bed and a car seat. Clothes, diapers, wipes, and formula if you don’t choose to breastfeed. It’s a good thing babies are cute because they can suck your wallet dry in the first year.
You can ease some of the stress if you have emergency cash. Consider using part of it for a set of earplugs. You’ll need them.
- It Takes a Thief
No one plans for identity theft. Most people don’t even worry about fraudulent transactions from their bank account. We assume the bank will take care of things and cover the loss.
Not so fast! Even if you can prove fraud, it takes most banks a few days (at least) to investigate your claim and return money to your account.
If someone steals your identity, add another layer of inconvenience. Your bank may freeze credit and debits cards. It’s likely you’ll wait for a new card and that could take a week or more.
If you don’t have emergency cash, Bonsai Finance can help you with funds. Recovering your faith in humanity may take some time.
- About That Water Heater
While identity theft is a threat to your tranquility and your finances, so is your home.
When you own a home, expect the unexpected. It’s never something as simple as a burned-out light bulb—you can make do with one from the closet in the spare room.
It’s usually one of the major systems like your HVAC or the hot water heater.
Water heaters are famous for going out with little to no warning. Furnaces and AC units never fail in the offseason.
Home repairs aren’t limited to major appliances either. It doesn’t matter whether you have a broken furnace or a broken window, home repairs aren’t cheap.
If you don’t believe it, take a walk through the nearest home improvement store. Take note of the cost of the systems in your home. Even buying parts for repairs adds up.
You can sleep in peace if you have emergency money.
- Tuffy Swallows a Toy
You couldn’t resist the doggie in the window, could you? He was cute until he chewed the squeak out of his squeaky toy.
Before bringing Tuffy home, you calculated pet food and the annual vet visit. What you didn’t figure into the pet budget were emergencies.
When the dog swallows a toy or eats a box of chocolates, you could end up spending thousands of dollars in medical costs. The average pet owner can’t cover their own out-of-pocket medical costs much less those of their animals.
Don’t put yourself in the position of giving up your beloved pet because you can’t pay for their care.
- You’ve Got a Toothache
We mentioned the fact that the average person in American can’t pay for out-of-pocket medical costs. With fewer today people having dental insurance, many Americans can’t cover a dental emergency either.
You can sometimes prolong a doctor visit or baby yourself until you get over a minor illness. You can’t avoid visiting the dentist if you have a toothache.
Without insurance, you could pay between $50-150 for a filling. Extractions run the gamut from around $100 all the way up to $600 or higher. d
That cache of emergency cash is sounding better all the time!
- A Death in the Family
Let’s get serious for a moment. Death isn’t a subject any of us enjoy talking about, much less planning for but it’s a reality.
If you have a death in your family, you’ll have expenses. For some people, it’s travel and hotel accommodations. For others, it’s helping with funeral costs.
Most people have no idea how much a funeral costs. You can’t even assume your family member has life insurance because many people don’t. And if they do, you may not get access to funds until after the funeral.
While you may not need to pay for the entire bill up-front, if you have emergency money tucked away, you can offer to cover a deposit until the loved one’s life insurance policy pays out.
Do You Have Emergency Money?
We don’t want anyone to live in fear but we do hope we’ve encouraged you to prepare for whatever financial curve balls life throws at you.
Building up an emergency money fund can help protect you from financial disaster if you lose a job, your car, access to your bank account, or a family member. Access to emergency funds can save your home, your tooth, or your pet.
When you save money for emergencies, you avoid catastrophes.
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