Okay so have you got an emergency cash fund? You should have, because if any kind of emergency ever crops up, you will want to have some cash ready and waiting to be able to dip into should you need to.
Cash funds have a myriad of benefits. Some of them are obvious when you start thinking about it, whereas others are not so obvious. Check out the list below to see whether your emergency cash fund is more useful than you thought it was. In addition, think about whether you should really be starting one up now if you haven’t already. Here’s why you want to have an emergency fund.
Emergency Cash Fund Benefits
1. You’ll get peace of mind. This is probably the big one, because boy, do you notice the difference when you don’t have an emergency cash fund around. There only has to be the smallest hint of a problem occurring at some point in your life for you to start panicking over what you will do if you have to shell out cash.
2. You’ll have a ready source of cash. This really follows from what I’ve mentioned above. The best thing to do with an emergency cash fund is to set it up –- and then forget you even have it (until you need to make use of it). It should be an account you can get instant access to without penalties or problems. If you have a safe, then lock your passbook or the details of your account in here.
3. You’ll have the ability to pay unexpected or forgotten bills. No matter how good or smart you are at budgeting, there are always going to be occasions when you completely forget that a particular bill is due. Annual bills are the worst because you only pay them once a year. Being able to have an instant access cash store to fall back on is the best bet. The same applies if you find out you owe slightly more in taxes than you thought you did.
4. You’ll have the ability to iron out any short term financial problems. Let’s say you end up needing to repair some items, pay a few extra bills or have to take unpaid time off work for some reason. Now imagine two or three of those happen at the same time. Having a cash reserve ready and waiting to be used will make times like this a lot easier to manage. Just be sure you bump your emergency fund back up again as soon as you can, afterwards.
5. You’ll be able to keep going if you should lose your job. No one likes to think they will be made redundant. But if you should be unlucky enough to lose your job or face a layoff at any point, you will be glad you put the effort in to create an emergency cash fund. It might only see you through a few weeks without an income (ideally, six months or more is the benchmark for a fund like this) but it could be long enough for you to achieve your goal of getting another job.
It’s plain to see that being able to have a fund like this to fall back on is a life saver in many cases. Don’t put off setting one up if you don’t have one already –- you will always be glad you did.
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