For many, building an emergency fund is a daunting task. We’re taught to consume as soon as possible in today’s society. Falling behind on the newest technology or clothes has become a major concern. However, what happens when your finances are spent on an immediate want—such as the latest fashions or newest smartphone—only to have a medical emergency a few days later? Would you be prepared for a financial emergency? Below are five benefits of emergency funds:
It Helps Manage Spending
A budget that incorporates an emergency fund places control over your finances to better manage spending. Going for a shopping spree feels WAY better knowing you’re financially stable in your present and future scenarios: you get all the fun and none of the guilt! Place immediate wants aside whilst implementing a budget for future security. You’ll be glad you did.
Financial Emergency Preparation Equals Decreased Stress
Think of having to go into a job interview in a week. It’s your dream job. You study the company, its culture, the role, and most likely interview questions. You print out copies of your resume on nice, heavy paper and even create a presentation for your interview—just in case. You’ve had time to prepare and feel confident that you’ve set yourself up to succeed. Now think of having to go into the same interview in one hour. No preparation, no resume printed, hardly knowing anything about the specifics of the job or company—but wanting the position just as badly. Which scenario would you rather endure? An emergency fund allows future preparation to decrease present and future stress. Your future self will thank you when that financial emergency happens and you’re prepared.
Protect Your Credit Score
Some debt can be beneficial and some types are necessary at certain stages in life. A financial emergency you’re not prepared for can result in excessive debt that you might struggle to pay off—and those missed payments can torpedo your credit score. The more you have saved, the less you’ll need to borrow in the case of an unforeseen emergency. Lift Credit can help you bridge the gap between what you’ve saved and what you need, and are upfront about the repayment terms—they even offer reduced interest rates to reward on-time payments!—so you won’t get into a situation that you can’t handle.
Protect Yourself Against Unemployment Distress
Surprisingly and unfortunately, your employment may not always be stable. You may walk into work having done everything right for months or years only to still be a victim of downsizing. Having six months of expenses saved in an emergency fund will give you the opportunity to figure out your next move without undue pressure and stress.
Prepare to Help Yourself, Loved Ones, and Assets
A financial emergency can take place anytime, anywhere. An emergency fund allows peace of mind when life doesn’t go as planned. Dependent upon your emergency fund amount, you will be able to properly take care of yourself, loved ones, and your assets. Can you even put a price tag on peace of mind?
An emergency fund is a key component toward guaranteeing future financial safety and freedom. Lift Credit aims to help you when it comes to knowing the right time to use your emergency fund and when to get help, quickly and easily. We understand that building an emergency fund is a process and financial emergencies don’t respect our timetables! If you find yourself in a pinch, we are here to help.