Most individuals face one or more challenges due to unexpected expenses. Though you do not want to spend more money than what is necessary, certain situations can force you otherwise.
Whether you are employed or a business owner, it is significant that you keep your emergency fund ready. An emergency fund will help you immediately sort out your financial emergencies. Think of it as your shock absorber should you get through a rough patch.
We have provided a list of the crucial reasons you should start building your emergency funds.
When you do budgeting for the first time, the chances are that you will leave out a few expenses. The emergency fund that you have can cover these expenses, and later on, you can add the costs to the budget plan.
These can be the annual expenses like the taxes and other gift items for your business organisation. Emergency funds can go a long way in assisting you in adjusting your budget without overstretching your monthly income.
When you see unplanned expenses coming up, you have to write them on a piece of paper and adjust the budget accordingly. After all, you need to minimise unforeseen expenses. If you want to settle your debts while building the emergency fund, you can opt to go through the debt settlement reviews.
Most people with a single income source have to build a substantial emergency fund. It can help bridge the financial gap should you suddenly lose your job or get an illness that prevents you from working.
So how much should you save up as your emergency fund? If you are single and living independently, you can save up to six months’ worth of expenses. However, if your whole family depends on you, you have to double up your emergency fund.
Since you are supporting your family, it is your duty to work towards building your emergency funds as fast as possible.
If you are a contractual worker, self-employed or freelancer, you will need an emergency fund to keep things afloat should you suddenly get a lower income. It is also vital that you have multiple income streams because the quantity of work tends to fluctuate at times.
Moreover, if you are already aware that the contract will end extremely soon, it is your responsibility to start building up the emergency fund.
If you are an entrepreneur, it is good to plan for extra savings, especially for those months when your business is going slow. Try to keep track of the invoices and ensure that you are not missing payment collection to avoid using your emergency fund.
When you are the owner of the house you are living in, it is evident that you will have to pay money for the upkeep and the repairs. However, it is significant that you set up sinking funds to cover the repairing costs such as plumbing and roofing. There is no need to feel worried and anxious since an emergency fund can cover extra costs.
There is no denying that home repair tends to be extremely expensive. That is why you should set up your fund before any expense occurs. Add to that. You also need to set aside some funds for your housing tax each year.
If you do not live with your family because of your occupation, it is obvious that travelling home will take quite some cash. Also, the prices can go up if you are travelling at the last moment due to an emergency. Therefore, it is a good idea to have the emergency fund saved up to easily cover the expense of the tickets in case of medical emergencies or unexpected deaths back in your home.
The price of airline tickets is extremely high, and you have to save money for that. You cannot ignore the fact that booking at the last minute can be more expensive than what you are expecting.
Emergency funds have proved to be extremely helpful for individuals who have had financial crises. However, if you still do not have one, you must plan on building your emergency funds as soon as possible. And in case you meet financial difficulties without enough savings, get an instant loan from Singapore’s licensed lenders. In fact, you can apply for a loan even on Sundays through online loan applications.