Emergency funds are easy to neglect, and even easier to dip into at times that you probably shouldn’t. While talking about them isn’t the sexiest convo to have, they’re important – so let’s chat.
Whether you’re money conscious or not, unexpected expenses occur and certainly don’t discriminate. They won’t sympathise that it’s the week before pay day, or that you just blew a couple of hundred on a gift for yourself. They are, as you’d expect, unexpected.
According to financial experts, you should have at least three-to-six months of living expenses in the bank in case of an emergency. Living expenses cover things like rent, bills, food and travel.
Although we can’t predict exactly when these emergencies will happen, we can give you an idea of what could happen, to give you a little heads up.
Here are some of the most common reasons why you might need to tap into your emergency fund.
Losing your job
If you were to be called into your boss’s office today and get the sack, how well do you reckon you’d cope financially? Something you probably don’t want to consider but depending on what kind of employment contract you’re on, a real possibility. You can be doing a stellar job but still get made redundant – without warning – if your workplace encounters financial difficulties.
It’s the biggest hit you can take in terms of unexpected expenses. You’ll have zero income so you need a contingency plan — money put away to support yourself until another employment opportunity arises.
Cars are bloody expensive, man. After you save enough to buy one, you’re left to deal with fuel, regular services, rego and insurance. On top of this, guess what? They can break down, and never at a convenient time.
Sure, if you look after your ride and get it serviced on the regular, it shouldn’t really break down, but it’ll find a way. Oh, it will find a way.
If you’re stranded on the side of the road, getting roadside assistance can come with some upfront fees. If you give a roadside service like the NRMA or RACQ a call, you’ll need to sign up on the spot, which will set you back a decent amount of cash.
If it’s something more serious and the guys and gals from the insurance company can’t fix, it’ll probably need to get towed to a mechanic. As you’d imagine, that comes with a hefty price tag. It pays to be prepared.
If you’ve got a doggo or a cat or any other pet, it’s more or less like caring for a child, meaning it’s your responsibility when they get sick or hurt.
Pet insurance does exist, but if you can’t justify paying those premiums, you’re going to be stuck with a vet bill. Spoiler alert, they’re not cheap.
According to a report from the Sydney Morning Herald, the average trip to the vet costs $270. In 2015, the most common procedures claimed on pet insurance were ligament and knee surgeries, with snakebites being the most costly; the severest of bites can cost up to $10,000 to treat. Yikes!
When stuff breaks, it’s more than an inconvenience – it affect your ability to do your job, too. So if your laptop or phone carks it, you don’t really have a choice other than forking over cash to get it repaired or replaced.
Something as little as replacing a smashed screen can cost hundreds of dollars.
Being asked to leave your rental property whether you’re being evicted – or simply because your landlord chose not to renew your lease – means you’re out on your butt.
To avoid having to couch surf and outstay your welcome, it’s best to have enough money for a new bond and a few weeks rent. Just to be safe.
While these scenarios seem pretty serious, knowing you’ve got a tidy amount sitting in your savings for times of need will make you feel empowered, instead of scared. We can help you to maximise your wealth and manage your finances accordingly. Our team is here. Call us at 08 8231 4709 or you can also reach us at firstname.lastname@example.org.
Article reproduced from TheCusp
by Bradley Johnston