Have you ever wondered what would happen to people who can’t swim and have no life jackets? Hard to think about, but it’s something that could happen, and whether we like it or not, when it comes to money, you have to prepare as though something may happen to you too.
In the case of an emergency fund, you are also preparing for the unknown and being financially ready for unforeseen situations.
What is an emergency fund?
An emergency fund is the money set aside for rainy days and used explicitly for emergency cases.
Example of emergencies:
- Job loss
- Sudden health issue
- Unforeseen major home repairs
- Major sudden car repairs
Benefits of an emergency fund
- You can earn more interest: While saving for unforeseen circumstances, you can also earn interest right on it. A significant flex your emergency fund gives you is the interest you can make on it while the money is in the plan. For example, when you create a plan on
HerVest for your emergency, you can set it to your desired duration and earn more interest on it over time.
- It reduces the risk of large debt: Most people who have no emergency fund often end up being in debt, and this is because, since they didn’t plan for the emergency, they may have to borrow a large sum of money to cover the emergency. All these wouldn’t have been so if they only had their emergency fund stacked somewhere safe.
- You get your peace of mind: There is no greater financial peace than knowing you have money somewhere safe no matter the reason. That’s the joy of an emergency fund. You realize you worry less and you are in a sane mind to do other things because you are not worried about emergencies
There are many more benefits to having an emergency fund can do for you. Do you want to know more about these benefits? Then it would be best if you tried creating your emergency fund plan here. That way, you can write down your comment below about the goodness of having an emergency fund. We hope to read from you soon.