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5 Reasons Why You Need an Emergency Fund by Michael J. Swanson “Gee, I wish I hadn’t saved up so much money,” said no one ever. However, you may have heard a financial planner say “So, what are you counting as your emergency fund?” The question leaves many of us dumbfounded. Anything extra each month goes toward credit cards or unexpected expenses, right? The rest is often tied up in retirement accounts or funds that we either cannot or are not supposed to touch for “emergencies.” But while we can cross our fingers hoping that a major household system like the heat won’t fail, or that everyone in our family will stay healthy, the truth is we’re only biding our time. At some point every person will experience an emergency—something “unexpected” that requires serious cash on hand.

Having some sort of liquid savings plan is critical. Here are some reasons you’ll appreciate having an emergency fund ready to go should you need it: Peace of mind

a familial fallback, it’s never fun to feel dependent on another—even a family member—for financial assistance. An emergency fund alleviates any burden you might otherwise put on others in times of hardship. On the flipside, this kind of financial freedom also allows you to be more generous with others or “pay it forward” for another friend or family member in a time of need.

Prioritizing health  hen your finances are healthy, you will be healthier W mentally—and maybe even physically. Sadly, many people don’t seek appropriate medical care or will postpone care when they lack funds to cover medical costs. An emergency fund will put you in a position to take care of health issues promptly—and ideally be proactive about routine or preventive practices (e.g., mammogram, cholesterol checks, annual physical) that might save you thousands later on.

Sometimes you really can “buy” peace of mind. Even some of

HOW TO START BUILDING AN EMERGENCY FUND

the most successful people weren’t taught to set up an emergen-

Most financial experts recommend accumulating enough cash to be able to pay all of your normal living expenses for at least six months. If you’re starting from scratch and that sounds unattainable right now given your circumstances, just start wherever you are with whatever you can spare. Then give yourself a little pat on the back for kick-starting a savings plan in the first place. Try the “set it and forget it” approach. Put away a dedicated amount—however small—by setting up an automatic withdrawal from your main checking account into an online savings account that you can tap easily if you need it. You can also set up a bank savings account and have your employer direct deposit a budgeted amount of your pay. Finding out what number you are comfortable with starting to save each month will require looking at your monthly budget (or making one in the first place). Look critically at what “excesses” (dinners out, all those unused TV channels, last-minute trips, etc.) can go to clear a path to saving more. This might mean getting more serious about tracking your monthly expenses so you stop “going over” your budget and putting that overage toward that rainy day when you really need it. Remember, though, an emergency fund is not a line of credit or a handful of credit cards. Planning to borrow money to tide you over when times get tough will only dig a deeper hole. The best way to build an emergency fund is with great patience: it takes time, but it is so important. It can take several years to build up your emergency fund, but doing something is better than doing nothing at all. Good luck!

cy fund during the early stages of their careers. But as their assets and knowledge have grown, most would now attest to the sheer peace of mind that liquidity can bring. Imagine a high-stress scenario like a medical emergency. Having inadequate monies only adds to the anxiety. Having a tangible backup creates an intangible peace of mind.

Career flexibility With an emergency fund set aside, you can get more creative about career choices and decisions. Knowing you have some money in the bank, you can be more flexible about leaving an unsatisfactory job or starting a new venture—even if the timing doesn’t line up perfectly with severance or other temporary financial coverage. Should you lose your job, an emergency fund will give you time to find new employment that’s right for you, rather than being forced to take whatever you can find on short notice.

Preventive maintenance While it’s not something that is fun to spend money on, doing regular maintenance on a home, car or other piece of property can save you serious funds in the long run. With an emergency fund you can arrange prompt and proper maintenance so that small problems don’t become big, expensive ones. This will also help maintain the value of your greatest assets.

Financial freedom Ever had to borrow from your rich uncle? While it’s nice to have 10 / LIVING SAFER / VOL 9 ED 2

Living Safer - Vol. 9, Ed. 2  

The Medicating of America: What pharmaceutical companies don't want you to know

Living Safer - Vol. 9, Ed. 2  

The Medicating of America: What pharmaceutical companies don't want you to know