5 Reasons Why An Emergency Fund Is Important!

An emergency fund could be the difference between a small blip on your radar and a big one. If something happens and you are not prepared financially, you can find yourself in a free-fall that can cause all kinds of problems.

Here are 5 reasons you should have an emergency fund:

1. Having money available in an eventuality can reduce a very stressful situation into one that is dealt with and taken care of with little effect to both physical and mental stress that comes with an emergency situation.

2. It gives a sense of security that in turn lets you feel a bigger sense of freedom.

3. There is no need to keep vast amounts of credit available in case you need it like a credit line or credit cards to make sure you are covered.

4. You can keep an emergency fund in a high interest account or Tax Free Savings – any account that can let you access it if you need it quickly.

5. And lastly if you have worked hard such as I have to get out of debt. An emergency fund lets you stay out of debt.

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Three to Six Months is usually recommended when building an emergency fund and it should cover all your mandatory costs for three to six months. Food, utilities, mortgage/rent etc…

Building a budget on paper or excel is always a good way to keep track of such things. Knowing where your money is always important.

Do you have an emergency fund? Do you need help figuring out how to get one started? Leave me comments below!