Emergency Savings - Why Financial Preparedness is Now More Important Than Ever |
Posted: July 10, 2021 |
With all the craziness happening in the United States and across the world brought about by the COVID-19 pandemic, emergency funds have become more important than ever to you and to your family. Economic fallout is inevitable as businesses close due to lockdown and stay-at-home orders. Big and small businesses alike are suffering. Investors and service-industry workers taking an especially hard hit. The world has had an unexpected turn. And with all this said and done, the financial impact of this global health crisis is likely to spare only a few. 2020 and 2021 are probably the most stressful years we could ever have, especially in terms of our finances. But there are things you can do to lessen the effects of the blow.
Economists suggest that a recession is highly likely to happen very soon. And every asset in your financial toolkit can be your emergency fund. If your job, health, or investments are at risk, a cash reserve is your first line of defense against debt and a serious financial crisis. Many people rely on government aid and payment-relief options from lenders. Although these can help you get by for some time, those are only temporary consolations for a long-term downturn. Prioritize your emergency fund - NOW.In the olden days, prior to the world being hit by COVID19, financial experts recommended keeping three to six months worth of living expenses in cash. This is to cover unexpected bills or crises. Every person and family is different and so some may be comfortable with less while some may want more than that. Regardless, the idea is that you have enough funds to support you in case you experience a financial difficulty like losing your job if it’s your sole source of income. And the best time to start figuring this out is NOW as no one knows what life may throw at you tomorrow. How much should be your emergency fund?To get the idea of how much you should keep as your emergency funds, calculate your bare minimum expenses for any given month and deduct any non-essential recurring costs, then multiply it by 12. The amount you’ll come up may seem daunting initially, especially if you’re currently unemployed or you are expecting to be out of your job soon. However, that only means that you need to keep saving while you still can. Save everything you can, any extra funds you get whether it be a tax refund, or your stimulus check. The money you’re not spending on transportation or gas, eating out, and other activities you cannot do under quarantine, are also funds that you can definitely add to your emergency funds. When the time comes that you need cash, never hesitate to tap your fund. It’s there for that specific purpose. Now is the perfect time to plan for the worst. Now is the perfect time for you to prepare yourself financially and lessen the burden of the financial crisis that is about to hit the entire world. Now is the time to start saving up for our emergency funds because we are in an emergency situation. Financial preparedness will allow you to survive this worldwide emergency and other unexpected challenges life may throw at you. Good luck!
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