By Charlie Brown

“You need an emergency fund” – this is a piece of advice you have heard from your mom, friends and possibly your banker as well. However, whether you have acted on it is the real question here.

If you have not, then you are among the 33% of the Americans who currently do not have any savings for emergency situations. At this moment, you are possibly conjuring up all the reasons as to why you do not need one. Well, let us see if we can change your mind with the list we have compiled just for you.

1. Losing your job: This is one day none of us wants to see. Writing this is giving goosebumps right now! However, this unpleasant situation is the most common reason for people to create emergency funds. The job market in the US is currently unstable. You should have enough cash stowed away to help you pay your mortgages and bills for the next six months. Getting a loan of any kind becomes extremely tough after losing a job. Title loans may remain your only options, and even then, you will have to find a way to pay the installments every month.

2. Healthcare: About 67% of Americans do not have health insurance. Even if you do, the chances are high that you are skimming on the high-end health coverage by paying less premium. A trip to emergency surgery can cost you near about a thousand dollars. This is not a small amount, and it is not possible to cough it up unless you have it saved somewhere. You need to have at least enough money to pay for your policy deductibles and co-payments.

3. Pet care: Your pet may have health insurance, but just like humans, their health insurance policy may not cover all surgeries and treatment. Sometimes, you will need to give them emergency medication, and that can create quite a dent in your monthly budget. Most of the times, the pet insurance policies pay for a fraction of the surgery and medical costs. You will have to end up paying for most of it. It helps to have some money kept aside for such situations.

4. Car troubles: Cars are fantastic since they get you places and get you there on time! However, maintaining one can become a hassle if you have to keep paying for routine repairs. We have the habit of whipping out credit cards for all occasions. From simple oil changes to a broken engine, we prefer paying through our credit cards. So what happens when your car breaks down in the middle of nowhere, where credit cards are not accepted? This is the time you thank yourself for keeping a separate emergency account that you can use to pay the repair bills.

5. Home remodeling and repairs: Flooding and electrical rewiring are common issues of homes approaching their middle-age crisis. You may be rolling your eyes since you have home insurance. However, what if the deductible is higher than you expected it to be? You can verify this, but home insurance covers only a fraction of what could go wrong. Most of the times, we end up paying a huge portion of the expense since insurance does not cover it.

6. Tax bills: Tax bills are a nightmare that comes with unpleasant surprises of its own. Tax bills can be so erratic that they put additional pressure on us to create an emergency fund, dedicated to this cause. Are you saying, you received a big refund last year? Well, that surely does not mean you will not owe anything to the IRS this year-end. Understanding their bills challenges ordinary human intellect at times. Therefore, it is always safer to start an emergency fund that can help you out with “larger than expected” tax bills.

7. Unexpected travel: This is bliss until you realize the huge credit card bills that will be awaiting you once you return. We are a credit-card-generation. We love to use them for everything, from buying tampons to getting tickets to visit our cousins in Tampa. If you do not want to face this situation, you might want to start saving today. So, when your friends plan a getaway to Vegas or Cabo, you can just pack your bags and go! You can leave all your worries behind as you sip fancy cocktails and let your hair loose.

8. Funeral costs: This is another grim cost that nobody wants on his or her credit card. Not only is it heartbreaking, but it also breaks your financial planning. Many funerals currently cost more than $10,000 USD. If your loved one has insurance, the chances are that the insurance company will reimburse you. Sometimes this reimbursement is only a fraction of the actual cost. However, it can be months before you receive the compensation. You will need some cash to buy your groceries and travel to the office. Emergency funds will not only help you with this, but you can also rely on it for post-funeral arrangements as well.

9. Dental work: Most of the times, dental work does not leave us with a big smile. It can be a rogue wisdom tooth or a simple cavity. Having dental surgery done can create a big hole in your pocket. If you have dental coverage, you are a part of the blessed minority. If you do not, you can only hope that someone is there to lend you the money on the spot. Either you can upgrade your health plan or get a separate health plan (but this will cost you more money on a regular basis), or you can save up for the day you might need your teeth worked on.

Having an emergency fund has no downsides. You keep saving money in a separate bank account, and you get a debit card for that account in case you have to pay for unanticipated expenses. In any case, you are not accountable to the bank or insurance companies for the money. If you do not need to pay for any emergencies, who knows, maybe you can sponsor the trip to Cabo yourself!

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