Stuff happens. We all know it, right? Accidents, illnesses, unexpected deaths, household calamities. That’s why it’s so important for families to have a rainy day or emergency fund.
Amazingly few of us actually make it a priority. Even when money is extremely tight, an emergency fund can be worked into the budget. There are simply too many things that can happen that will leave you in a financial catastrophe if you do not have an emergency fund in place.
1. Job Lay Offs. It has been reported that more than 20 million people were laid off in 2011. Most of these people were unaware that their jobs were in jeopardy. Even though you may qualify for unemployment benefits, these benefits are only a small percentage of your actual pay and only last for a few months.
2. Unexpected Injuries. If you are injured at work, in a car accident, or under any other circumstance, you will not be able to work during your recovery. While insurance may cover some medical care and provide a portion of your income during your recovery period, you may still need access to an emergency fund.
And in the event of a major injury, you may need resources to hire a lawyer. One injury lawyer in New York, stated that “your attorney can help you build your case and gather evidence and can assist you in pursuing compensation for medical bills to cover past and future medical treatments arising from your injury and suffering, for the physical discomfort you experience as a result of your accident.”
3. Natural Disaster. They are in the news every day: lightning strikes, hurricanes, mudslides, wild fires, floods, blizzards and earthquakes. They occur in every area of the country, and you should have a survival plan.
Having an emergency fund in the event the unthinkable happens will provide some financial protection until you get back on your feet. It is important to remember that if it is a wide spread disaster, it may take several months before your insurance company responds to your case.
4. Prolonged Illness. You never know when an illness can strike you or your partner. Loss of income for even a short period of time can send some families into a downward spiral of financial ruin. What does it take to keep you and your family afloat each month? You need to make sure that you can cover medical bills and lost income during an unexpected illness.
5. Emergency Repair. You may find yourself with a large auto or home repair that was unforeseen. Both of these can cost thousands of dollars, leaving families in dire financial straits. Many have to opt for very expensive financing to cover these repairs, creating more financial problems.
There are many other things that could occur that could leave a family facing financial ruin if they do not have an emergency fund that can help them survive. It can be very difficult to start an emergency fund, but every effort helps.
Even if it is only a little bit each week, set it aside for a “rainy day.” If something bad should happen, you will have something to fall back on. If nothing ever happens, and let’s hope this is the case, then you will have extra money to enjoy in your retirement.
Writer LaGeris Underwood Bell knows all too well that what looks like a rainy day can turn into a deluge with little warning. She hopes this article will encourage everyone to see the value of starting an emergency fund. Some of her research for this article came from the website of David Perecman, an injury lawyer in New York.