Emergency Funds: Why Are They Important?

crisis Emergency Funds: Why Are They Important?

Sometimes life doesn’t go to plan, and we’re faced with an emergency that could leave us cash-strapped.

An emergency fund is what you put away for a rainy day. It’s cash that is set aside that you forget until you need money quickly for an emergency. Emergency funds are what you put away for a rainy day. This is cash you should ignore is there!

No matter how well you stick to your budget, there may be times when your savings could be more, and you’ll need access to extra money.

Emergency Funds For When Things Are Tight

Emergency funds are monies set aside for when something unusual and unexpected happens. 

With the current economy, more and more Aussies have issues saving. With the high cost of living, most people are just getting by, leaving little to put into their savings.

Let’s dive in and look at places people turn to for emergency financial help.

●     Friends and Family – generally speaking, friends and family are often the first people we turn to for help in an emergency. 

Unfortunately, with the current hard times, they may not be as cashed up as before. 

●     Selling Items – nobody likes to get rid of items they love, but when you need money fast, there might be a valuable item that you could sell.

●     Payday Loans – these loans are pretty easy to get. But the amount one can borrow is minimal. A Payday Loan gives you a percentage of your monthly salary, which is repayable in full (with interest) at the end of that same month.

●     Personal Loans – a personal loan is an amount of money you can borrow for various purposes (medical emergencies, home renovations, planning a dream wedding, etc.) Banks, credit unions, or online lenders can offer personal loans. The money you borrow must be repaid over time, typically with interest. 

With the Covid Pandemic, economies have taken a considerable blow. Things are starting to improve, but 1% of Australians are worried they won’t be able to pay all their bills in the next three months. 

Although this is an improvement on the 3% statistic in June 2020, many Aussies still need to regain their equilibrium.

Reasons For Needing Emergency Funds

Why would we need emergency cash? Let’s look at some of the typical reasons.

1. Medical Emergencies

Medical emergencies and surgeries can be costly. If you don’t have a saving buffer when you or your family falls unexpectedly sick, you might need to look for large amounts of money in a hurry. Even those with private health insurance may need to pay for the out-of-pocket expenses. 

2. Funeral Expenses

Sadly, all the medical help in the world sometimes fails, and a family member passes on. 

Not all Aussies have funeral policies, and funerals can get pricey.  

These emergency funds will have to be accessed very quickly because when it comes to funerals, there is a time factor involved, and things have to move along soon.

3. Veterinary Expenses

Most families have a pet that’s part of the family. You can protect your fur baby with all the shots it needs, but you can’t protect it from severe illness or accidents.

Your dog or cat could be attacked by another animal or run over by a car. Unfortunately, not everyone is a responsible and caring citizen, and a “hit and run” can lead to a mounting vet bill.  

4. Car Repairs

Let’s say your starter motor packs up or your alternator dies. Your brakes may need replacing or your gearbox strips.  

All of these are things that can quickly go wrong with a car. This can be costly if you consider the parts and labor costs involved. 

5. Insurance Excesses

A wise person takes out various types of insurance. This includes cars, bikes, vets, and health insurance. However, even when your claim has been approved, you still have to deal with the excess, which can sometimes be relatively high. This is another reason for needing emergency funds.

6. Home Maintenance Repairs

Maybe there is a freak storm, and part of your roof blows off. This is a huge emergency that needs fixing right away! But, even if you are insured, you will still have to cover the excess on the claim before the repairs can be done. And if you don’t have insurance, you’ll need money fast to get the house back into order. 

7. When You’re In-between Jobs 

The current labor market is as hot as it’s ever been in 45+ years. So you may find yourself job hopping. You may need a cash boost when you’re between paychecks. You should be clued up on accessing these funds when in such a situation.

How To Access Emergency Funds

With the cost of living, many are under stress. If you are one of those people, don’t despair. Credit24 offers personal loans of up to $10,000 to assist. 

Visit https://www.credit24.com.au/personal-loans/ for more information, and to make it easier, you can access some of the more frequently asked questions here.