Financially speaking, managing an emergency fund should always be one of your utmost priorities. To simply put it, there’s no way one can ever know when any unforeseen (and costly) necessities could come upon.
Nonetheless, by being prepared beforehand, one will always manage to reduce a significant portion of the financial strains that will come with them.
Regarding the size of these emergency funds, a standard guideline is for them to be large enough to cover at least up to three to six months worth of living expenses. But did you know that, depending on your situation, your most recommendable amount could vary?
Several cases could significantly change things for you. If you were to identify with any of them, you’d then need increased financial protection. Which in turn means you working on an emergency fund might be a good idea.
When should you work on an emergency fund?
When you’re a homeowner
Owning a home means that you’ll eventually need to pay for repairs, and home repairs never come cheap.
Without any notice, a window could shatter by accident, or an essential appliance might malfunction. Alternatively, the heating system could break down in the middle of a cold season. The possibilities are endless, and all it takes is some bad luck to find yourself in any of these situations.
Of course, you don’t want to find yourself unable to pay for these unexpected expenses, so you might as well expand your emergency fund’s size to cover for them.
When you’re a parent
Having children of your own also comes with its fair share of expenses.
You have to pay for their tuition, and you constantly have to buy them more clothing any time they outgrow their previous batch of new clothes, pay for their outdoor activities and other interests, and pay for their healthcare.
Now bring into the equation that you have to keep up with these expenses (and more) until they’re old enough to take care of themselves. Then multiply any expected amount if you have more than one kid to take care of.
By boosting your emergency fund, you also prepare yourself for any unexpected expense that any of your children might need to have covered.
When you’re a pet owner
Pets are always an essential part of any family. There’s no reason to doubt it.
Keeping that in mind, pets also come with needs of their own. No one can ever predict when any pet will need medical assistance.
Sadly, veterinary rates aren’t cheap either. So, if you are responsible for a pet, you should also consider the possibility of emergencies involving said pet.
By increasing your emergency fund to cover your pet’s needs, you are also making sure that its wellbeing doesn’t bring down any debt upon you.
When you have a health condition
Suppose you are currently dealing with any health condition that could prevent you from working entirely. In that case, it stands to reason that your emergency fund should also consider that.
Ideally, your insurance should already have you covered in this regard. However, a larger-than-average emergency fund will always be an excellent backup plan if your insurance reaches a point where it can no longer be of assistance.
It never hurts to have a little extra protection
Opening, managing, and investing in an emergency fund is no easy task. The sheer amount of time and effort needed might even look at too much for some.
Nonetheless, even the slightest amount of money can mean the difference between financial stability and debt when it comes to emergencies. Of course, nobody wants a crisis ever to occur, but it never hurts to prepare ourselves for the worst.
With a bit of extra protection, we can all rest well assured, as we are now well aware that our finances’ prospects for keeping your family’s wellbeing safe are more than favourable.
The post When to Work on a Bigger Emergency Fund appeared first on Financial News.