Congratulations on coming so far in understanding the basics of financial wellness. If you are still not comfortable with the idea of economic health, check out our blog here.
In this blog, we will discuss five reasons you need to build an emergency fund. If you are unaware of what an emergency fund is and how you can create one check out our blog on the same here.
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So let us begin:
Five Reasons Why You Should Make an Emergency Fund
- Stability of Income - If you are a working employee, then the risk of a job loss should always be considered. Even if you work at a stable company and have a secure position, you must not take lightly external risks that might affect your job security. The recent Covid-19 pandemic has shown how suddenly things can change in the jobs markets. Even if you are self-employed or own a business, the risk of income instability and a business loss is always there. It is wise to have an emergency fund so that a sudden bump in your professional life does not impact your personal financial life.
- Health Expense - It is advisable to have health insurance, but many medical treatments might not be converted in your insurance plan. There is also always the risk of the insurance claim not getting cleared or getting cleared too late. In any case, it is best to have a source of funds that you can rely on when you need it urgently.
- Family Financial Security - If you are the sole bread earner in the family or have a family that depends on you financially, you must maintain an emergency fund to account for their financial well-being in case of any mishap. We have life insurance for that, but your life insurance might not cover an injury that might put you out of work for a few months. In case of death, also sometimes insurance claims can take time to get cleared, and the family might need funds for various purposes immediately.
- Unexpected Big Ticket Purchase - A car breakdown is the perfect example of big-ticket many such scenarios you purchase expense that might come up unexpectedly. You must be prepared for many such systems before you move on to building an investment fund and retirement fund.
- Natural Disaster - The likelihood of a natural disaster is low. With sophisticated weather forecast teams, most cities are well prepared by the government for a possible natural disaster; however, proper financial planning demands that you stay ready for the worst. A fire in your place of work or residence might put you in a lot of pressure financially. That is precisely when an emergency fund will help you navigate the tide.
We highly recommend that you build an emergency fund and have developed a tool that will help you do that efficiently. Download the Wizely app and check out how to make and save for an emergency fund.
Build your Emergency Fund with Wizely
If you wish to learn how Wizely can help you build an emergency fund, check out our blog on the same here.
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Follow our 'Emergency Fund' Blog Series:
What Is an Emergency Fund and Why It Matters?
How Wizely Can Help You Build a Robust Emergency Fund