The Importance of An Emergency Fund

When it comes to finances, having a backup plan is the best kind of plan. We’re breaking down 3 reasons why you should start an emergency fund if you haven’t already done so.

You’re Self-Employed

There are several variables that come into play when you’re self-employed. The freedom to be your own boss is a huge lure, but it also comes with risk. Your business may have some months that are slower than others, for example, so you’ll want to have a safety net for yourself when times like this arise to avoid putting your business financials at risk.

You Own Your Home

Sure, homeownership can be very rewarding, but it also comes with its own set of stressors and unforeseen issues; usually when you’re least expecting it. Having an emergency fund in place for the next time your hot water heater needs to be replaced or your patio needs a facelift will give you one less thing to worry about in the home repair process.

You're Saving for a Goal

If you are working toward a goal (like becoming either of the two that we mentioned above), your emergency fund can stop you from dipping into your savings when unexpected expenses pop up. This is important because it can prevent you from moving backward with these goals that you’re working towards. Although your progress forward may slow a bit as you rebuild your emergency fund, you will be able to leave the money that you are saving for yourself, which is a great way to protect your savings. Think of your emergency fund as an insurance policy against unexpected expenses. 

At the end of the day, it doesn’t matter what you start your emergency fund for, it just matters that you start one.