5 Reasons Your Family Needs An Emergency Fund

Tuesday, February 28, 2017
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While you never know when unexpected expenses will arise, you can minimize the financial upheaval that's often caused by unexpected bills by setting up an emergency fund. If one of life's major issues occurs, you won't have sleepless nights wondering if you should cancel an upcoming vacation, put off the bathroom renovation, or getting exterminators in to deal with a nasty case of ants. It's best to open a separate account and determine a set amount to deposit each month to give yourself a decent financial cushion.

Here are a few key reasons why an emergency fund is a good idea, even for the best-prepared families.

Car Repairs
The car's been making a funny noise for weeks, the brakes seem slow, and your headlights have been flickering. Still, you've put it off because you know the repairs will be costly, and you can't afford it. You may need to dig deep to pay for the repairs, and it's not a good idea to take out a loan as payday loans are a costly choice and do come with risks of their own including high interest rates. But if you've set aside money or have a nest egg to turn to there, you'll have a better option.

Medical Bills
We've been down this path all too often. A few years ago, Harper broke her arm. Luckily, our medical insurance and the gymnastics facility's secondary insurance covered most of our expenses. However, we still had several hundred dollars to pay out of pocket. A few months later, she was in the hospital for several days when she was diagnosed with type 1 diabetes. It seemed our medical expenses would never end.

Even a routine check-up costs money let alone any long-term health condition that greatly impacts your life. The number one reason why many Americans avoid going to the dentist is the cost involved in fillings, root canals, and crowns which, if you need substantial work done, can spiral into thousands of dollars. Most medical treatment isn't free, and even walk-in appointments come with a small bill attached, but if your son or daughter falls ill suddenly, you don't want a shortfall of money to stop them getting the best treatment they can. Investing in a comprehensive medical insurance plan is one way to keep these expenses down, but having an emergency fund will ensure that you can cover out of pocket costs without worry.

Job Loss
Losing your job is one of our worst fears. If you're currently in this situation, it can feel depressing, almost hopeless at times but you have to try to remain positive. Think of it as a chance to make a career change or go after a dream job at a rival company. Don't make any rash decisions and speak to HR about negotiating a favorable redundancy or severance package. Unemployment is both a frightening and uncertain period; you don't know for sure how long you'll be out of work so you need to make sure that the household can manage on a reduced salary. The best way is to work out all your current outgoings and incomings, you may need to tighten your belts but if you've been sensible the financial fallout should be relatively minimal.

Pet Problems
We all love our fluffy, furry companions to bits but when they get sick it isn't as straight-forward as when a human being falls ill. Often pets won't show signs of being sick until the last minute; this often means an emergency vet call or a trip to the animal hospital to quickly diagnose the problem. Larger animals such as dogs and cats tend to live longer than say rabbits so you must think about their health and well-being at all times. Vet bills stack up quickly, especially if there are a myriad of health problems to treat and it isn't always in the best interest of your pet to keep sending them to the vet as it could cause unnecessary pain and stress. Always check what's included with your pet's insurance plan, some have a certain number of free or discounted visits as well as different levels of care. Responsible pet owners should always have some form of insurance, or enough cash put aside to deal with any pet emergency.

School Fees
Whether your children attend public or private school, there are always expenses attached to both. When it comes to tuition fees, it all depends on which type of school your children attend. For children attending a parochial or private school, tuition can quickly reach into the excesses of $15,000, even more. We all want our kids to have the best education possible, but fees suck up a large chunk of our income. Be aware that if money does get tight most public, or private schools are somewhat strict about fees. The best way to avoid demands is to pay over the invoiced amount each term, that way you're always in credit and will have a few weeks breathing space to come up with the necessary amount.

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