Some people will not budge on having an emergency fund. What is an emergency fund? It is actually money which is set aside for an emergency situation. In other words, it can be considered as a rainy-day saving. Now, the question is, is it crucial to make an emergency fund? Most definitely it is. You better not think twice to make one.
Emergency fund is the available source of finances to assist us whenever we have financial dilemmas or even unexpected cases such as an unbearable suffering/illness, a major repair to your home or car and others. Some of you would think that emergency funds are only relevant to working adults. However, as a student, you might face this kind of financial pinch too during your years of study. For instance, there will probably be a time in which your parents/family will not be able to provide you money for you to buy books or for your daily expenses. So, what are the immediate actions that you shall take? Thus, this is when an emergency fund will take place and play its role. Here are the six reasons why you need to create one and it is actually important to everyone, even the students.
1. Emergency cases
Indeed, every person may encounter an unpredictable incident in their life. This includes the students as well. For instance, there are certain cases that might occur to the students in which they will need to get extra information or knowledge for their courses learned. Sometimes, it is also difficult to find the latest edition of the book in the library and at the end of the day, they still need to purchase it. Moreover, some students also may have their own transport such as a motorbike or a car and of course, they need to be prepared in case of having a breakdown or to repair their vehicle. The worst case/scenario is when they lack of pocket money or proper savings when facing any emergency cases and this will definitely cause a burdensome to them. Thus, if you have your own emergency fund, absolutely your emergency fund will come to the rescue whenever you face any sorts of emergency circumstances.
2. Far away from home and family
When you are far away from your family, you need to be independent by any means. You yourself need to travel far from home to further study or to have a better work/career. Most of the time, you will take the chance to return to your hometown whenever there are holidays. You probably have to spend quite a lot of money on the transportation costs and the travel expenses, but it all depends on the types of public transport that you prefer and you find it the most convenient to you for a long journey. Nevertheless, the farther the distance, the more you will need to pay. Spending money on fuel also needs to be considered for students who own a vehicle. Hence, if you have an emergency fund, you can use it for a backup/mayday case every time your family requires you to return to your home/hometown immediately.
3. The key to improve yourself
Some of today’s generations are being overindulged and living in a comfort zone. As a result, they do not have the skills to solve their own problems and feeling stuck in life, especially when it comes to money management. Most of their parents already prepared everything for their children including the financial aspect. Whenever they do not have enough money, they can easily ask from their parents. They probably splurge on unnecessary things because they might think that the money will come instantaneously. It is okay to get your parents’ help but you need to start thinking on ways to save money given by them too. For instance, you can start planning your own financial goals to build an emergency fund. In fact, you can figure out your own forte and improve your financial skills while building an emergency fund. By taking this action, you can develop your own financial planning. All you have to do is just try to reinvent yourself so that you can free yourself and won’t feel stuck in life.
4. Enhance your confidence level
Creating an emergency fund can increase your confidence level to handle myriad situations in life no matter how hard it is. Most importantly, you can control your own money and manage your expenditure. For example, you can pay off your personal loans early and be able to reach saving and investment goals. Furthermore, if you have an emergency fund, it will assist you to boost your self-confidence. You will certainly try to make any decisions that will enable you to move forward not only for the current situation but also for your future. As a result, you will have the confidence to become an organized and more independent person.
5. Get yourself prepared
Graduation is one of the happiest moments among the students. However, life after graduation is more challenging in which they need to find a job. This is where the emergency funds will help you to cover your daily expenses during the period of seeking for a job. If you have an emergency fund, the less the burden will be for you and your family whilst you are looking for a proper job. However, do not take this matter with a frivolous manner because the money can be used for other circumstances. Hence, try to find a good part-time job as you can at least start saving and making your own emergency fund. As for those who are working, you will not feel clueless and worried the minute you confront any unexpected events since you know that your emergency fund is ready to help you.
6. Secure your financial future
This is the most crucial reason why you need to have your own emergency fund. You probably cannot pay all the expenses without proper planning. Due to the rising cost of living and you may need to go through sickness, unexpected situations and even during a rough economic time, there is no reason for you to say “NO” for starting and building up your emergency fund. You also need to think about the best ways to prepare and make good choices for your future in which you will have your own house, vehicle, family and children.
With these reasons, let’s start making our mayday emergency fund! It is okay to start and build up your own emergency fund quite late rather than never making one at all. It is better late than never guys!