An emergency fund has a function as an initial payment when there are sudden events or events that occur in your life. These are 5 events that require an emergency fund that you should be aware of.
Emergency funds are savings funds that can be used in urgent or urgent situations, such as paying for hospitals, accidents, renovating homes or cars, etc. that are sudden or sudden.
This emergency fund has an important role in a family, especially in critical or urgent circumstances. Imagine if you don’t have an emergency fund, surely your financial flow will immediately fall apart instantly and can result in not meeting your daily needs.
Someone must have an emergency fund of at least 6 times the monthly salary or 6 times your monthly living expenses. This emergency fund must be sufficient to meet your needs until you return to its original position.
Besides being able to maintain financial stability, emergency funds can also help reduce stress levels and prevent you from shopping impulsively because you already have a handle. So, when is the right time to use your emergency fund? Here are 5 events that require an emergency fund.
Conditions that can happen to anyone and at any time, require sudden costs that are not small. Especially if we get caught with an illness, of course the costs incurred will be greater to cure it. This is when emergency funds are used. Even many are looking for cash loans to cover it.
2. Loss of work
When you lose your job, an emergency fund is usually used to meet daily needs. At this time an emergency fund is needed to keep the financial condition stable until you get a job again.
3. Renovation of a house or car
A house that suddenly leaked or a car that suddenly broke down in the middle of the road requires a lot of repair costs. At times like that, you need unexpected funds to fix it. If not, then your house or car will be damaged for too long. This impromptu fee is usually taken from an emergency fund that you have kept.
4. During a disaster
Fires or floods are disasters that we cannot avoid. The damage caused by this disaster makes the financial condition messy, even you experience a lot of losses. Emergency funds are used to restore the situation to its original state.
5. Education Fees
The more days the cost of education is more expensive. Even though you have prepared education funds for children, sometimes you still need additional funds. At this time, emergency funds are usually used to help cover the lack of education costs. If not, maybe you can apply for loans to several financial institutions.