People consider their 30s to be the prime of their lives – it falls right in the middle of working hard to establish yourself and preparing for retirement. It’s the only decade of your life where you don’t have to think about what the future holds because you’ve already tied a bell around its neck.
When you’re at this juncture of your life, it might be difficult to imagine why you might ever need an emergency fund.
It is a misguided belief that emergency funds are only ever needed when you’re short on funds or when you’re preparing for a possible crisis. Not every “emergency” has to be a life-altering event from which you would never recover. More often than not, what constitutes an emergency might just be a wayward hospital bill.
Although I do encourage all the readers to always be prepared for the most dramatic situations – I believe prevention is better than cure, sue me – it’s important to note that an emergency doesn’t always have to be a near-death event at all. Sometimes, an emergency can just be a sudden expenditure you couldn’t reasonably foresee. And it is precisely for this reason that you should invest in an emergency fund as soon as possible.
Your emergency fund will help you to cope with and overcome any sudden financial blows you may face in life. The main goal of investing in an emergency fund is to safeguard yourself against debt.
Every one of us is bound to face some unfortunate life events that will leave us devastated and in tears. Dealing with emergencies like this is the primary need for an emergency fund:
- An unexpected medical emergency in the family,
- Death of a loved one leading to funeral expenses,
- Losing a job or livelihood,
- Crisis in the family, among other things.
Big, life-changing events like these already come with their own set of consequences. If you’re unprepared to bear the cost of events like these, it may become twice as traumatizing and not just for you but for your loved ones as well.
Going into debt as a result of paying for a dear one’s cancer treatment can have disastrous effects on your family life, your health, and the well being of your entire family.
However, there might also be some smaller but equally unexpected events that can be assuaged with an emergency fund:
- Pet-related medical expenses,
- Moving from one state to another on short notice,
- Car troubles,
- Losing disposable income, among other things.
If you try to face situations like these with no preparation or planning, they will add to your debt.
While these incidents might not be major enough to tip your life into total disarray, they can affect your finances badly enough that you might have to cut down on certain expenses you were able to easily afford before. This could lead to a shift in lifestyle, and such changes can be quite hard to adjust to, especially if you have children in your family.
If you’re wondering whether to start investing in that emergency fund now or two years later, my advice would be to start as soon as you can. Like I always say, it is never too early to plan a safe, secure, and hassle-free future.