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Do You Need An Emergency Fund? Yes You Do

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This “ Do You Do You Need An Emergency Fund? Yes You Do “ posts explains the reasons that you are better of with emergency funds regardless of the situations you are in or where you are in your life. 

I am in a different place now, literally. I’m currently visiting my family in North Carolina whom I have not seen in 2 months. It’s only 2 months but it seems like it has been forever.

It took me 5 hours to drive from Maryland to North Carolina. Of course, I was with my wife and my daughter, so, I had to stop from time to time.

Every time I drive, I like my radio to be turned off. But this time, it was different because my wife got tired of me singing the same Filipino songs over and over again. So, I turned on the radio and started listening to some music.

And, then, I found myself listening to a radio segment where listeners can ask for advice regarding their situation. There was this lady who expressed her feelings about her financial dilemma. She has been unable to pay her medical bills and she doesn’t have enough money to pay her day-to-day bills.

I felt she was crying when she was telling her story. But she was holding back.

I didn’t get the whole story because I started listening when the conversation had gone for a few minutes. While I was driving, I couldn’t help but wonder about how many people are in the same position as she is.

Out of curiosity, I looked up any statistics on people who are unable to meet their unforeseen expenses. According to a study, 62% of Americans are not able to pay their unexpected expenses. This is really a shocking fact to me.

I have been in situations where I or my family didn’t have emergency funds and couldn’t afford to even meet our own basic necessities. Being in those situations is never for the faint of heart. Being there can make you question your life, what you’ve done wrong to be in those situations, etc.

Having a safety net is necessary for me and my family. This means that we need an emergency fund.

Reasons You Need an Emergency Fund

As someone who has been in such position in the past, I can attest the benefits and the necessity of having an emergency fund stashed for unforeseen and unexpected expenses.

1. No one can help you but yourself

Your family and friends will always be there. But what if they are not able to help you because they have financial problems they need to attend to. You may find that nobody can help you. When all of the people you know can only mind their own business for now, the only person you can rely on is yourself. It is in your best interest to keep a stash of money for rainy days.

2. No lenders can extend credit to you

Lenders may not be able extend you credit if you have a credit history or credit score that does not meet their requirements. If you happen to need funds and your identity has been stolen, at the same time, lenders may not provide you credit until your identity has been straightened.

3. You lose your job

In this economy, a number of companies will cut jobs to survive and stay afloat. If you get laid off, are you guaranteed to have money to pay your bills until you find another job? Can you say that you can easily find a job? Hopefully, your answer is yes if you don’t have an emergency fund. But as always, the odds are against you when it comes to finding job in a marketplace filled with unemployed, highly qualified professionals.

4. You encounter life changing events

These life changing events include pregnancy, adoption, illness, among others. Are you prepared to meet the financial demands of these events? If you have, then, I would assume you have either good insurance coverage or emergency fund stashed somewhere. If, not, then you will find yourself trying to find ways to meet the needs of these events faster than when you should (just in case these events come sooner than expected).

5. Your means of transportation is not reliable

Car costs a lot. From the time you buy a car to the time you dispose it, you will need to shell out money on car. In between the buying and disposing stages, there is maintaining stage. You are required to maintain your car to prevent you from solving car problems that can easily destroy it and increase your chances of buying another one. Do you have money to pay for these car repairs? You need an emergency fund to cover these repair costs.

6. Your child needs are unpredictable

I have a daughter and her needs are constantly changing. Whether it’s medical or physical or something else, her needs are constantly in motion and changing without notice. This means that my wife and I have to satisfy her needs. A lot of parents can agree with me when I say, raising a child is worth it but it can be expensive, at the same time. Do you have funds to meet your kid’s needs? You need an emergency fund for things like this. If you have other sources of funds for meeting your child’s needs, then, it’s good to use those instead of the emergency fund.

7. Your relative passes away

I’m including this because I have been in these kinds of situation quite often. It’s saddening but it’s reality. I have relatives in the Philippines and elsewhere in the US. When my brother who lived in the Philippines died a couple of years ago, I had to go home. When my brother-in-law in NC died a couple of months ago, I had to go home, too. I have an extended family. In cases like this I need an emergency fund so I can be there physically for my family. Travelling costs can be quite expensive.

8. Your prescription is not covered

You have a health insurance. Having said that, some prescriptions are not covered by your insurance company. If you are prescribed by medications not covered by your carrier, you may need to pay out-of-pocket. Medicines are not cheap and can cost hundreds of dollars. Do you have money to pay for these medicines? Remember, these medicines can and will save your life and you need these. If you aren’t prepared for these expenses, what would you do? Your emergency fund can go a long way.

9. You have been divorced

Though unfortunate and saddening, the reality is some marriages don’t last long. What’s worst is the financial battles between the spouses. If you happen to be stuck with paying all the bills (i.e. from lawyer fees to mortgage), you may be looking at paying thousands of dollars. If you have not saved enough, how would you handle this type of situation? Having emergency funds can sometimes solve or alleviate the problems while you are looking for better ways to solve them.

10. You moved to another place

So, you got a new job, that is, a better paying one. You need to move but your new company won’t be paying the relocation expenses. How are you going to pay for these? You can always use your credit cards. But if you don’t have a credit line sufficient to address these relocation expenses, how would you pay for them? Your emergency funds can help you pay for these. You just have to replenish them once you start getting paid on your new job.

11. You have become disabled

So catastrophe happens and you become disabled. Next thing you know is that you cannot work temporarily. If you have a temporary disability insurance, then, you may be able to cover your immediate bills or needs. But what if you don’t have insurance and your company doesn’t have disability benefits. Can you honestly say that you can financially survive? Your emergency funds can cover the expenses as a result of you not having a stream of income because of your disability.

12. Your work hours have been cut

You are still fortunate if your company decides to just cut your hours and not let you go permanently. At least this way, you are still earning money though not a whole a lot. If this happens to you, how are able to meet your bills. You can’t say to your bill collectors that you will only pay them half. That’s not how the business goes. You can make payment arrangement in the interim but it can only extend to several months and not for a very long time. Your emergency funds can support the income you have lost and pay for any bills you have.

13. Your kids need money

Your kids are all grown up but you may need an emergency fund for them. They have their own lives. But suddenly, they find themselves needing money? They can’t go to anybody because nobody can extend help to them. As a parent, you will always be there to rescue your kids. I know my wife and I would because that’s how we were raised. I may not speak for everybody but my and my wife’s obligations to our kid far extend to college expenses. My kid will always be our kid and we will always be there to support her. Emergency funds can fill the need gap until your kids can stand on their own. Plus, they can always give your money back but that’s not a guarantee.


Have I convinced you that you need an emergency fund? Having an emergency fund can lessen the burden and pressure you have when all the bills are coming in and you need to pay them regardless of where you are in your life or what you have or don’t have. It’s always better to prepare than to figure out the solutions when the problems are already right in front of you.




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