10 reasons you may need an emergency fund

In today’s world anything can happen and yet many are not prepared for if emergencies happen. I don’t just mean emergency preparedness in the form of supplies, plans etc. although those are important (CLICK HERE to see my posts on emergency preparedness kits), I am specifically talking about financial crises.

Why you may need an emergency fund

1. Medical Emergency– Here in Canada we have universal health care so we don’t necessarily pay straight out for treatment however certain things are not covered such as medication, equipment (such as crutches, wheelchairs etc.), massage therapists etc. Outside of Canada (where most of my readers are) you have the larger difficulty of paying of all forms of health care which can get quite pricey. Insurance helps for sure but it can only go so far and you don’t want to have to choose between eating and receiving quality medical treatment

2. Pet Emergency– In case it hasn’t been made clear I love my cats A LOT and if it were necessary I would take out a loan to make sure they have quality care from a vet when they are ill or injured, that being said I would prefer to not have to do that. I do have pet insurance with my health care plan which was an additional option with my insurance provider, however it does not over all costs associated with a vet visit which can become quite pricey

3. Job Loss — Are you prepared for it you or your spouse were to lose their employment. As the main earner in my household if we were to lose my income we wouldn’t be able to meet the demands of our bills & everyday living expenses and although I am the main earner we also highly depend on my husband’s income. Just a week ago there was a bit of a scare concerning whether or not he would still have a job this week (luckily everything worked out) but nothing is certain and it’s better to have a little nest egg in case something goes wrong.

4. Major Dental Expense– One thing not covered by Canada’s universal health care is dental care. Luckily I have a good insurance plan which covers 80% of my dentist bill however there are situations in which I may need access to my emergency fund to pay the dentist, if I require cosmetic dentistry (I work with people and sometimes cosmetic work is a necessity can’t be working with people with bad teeth) my insurance only covers half, also there is a cap for how much the insurance company will pay per family member, if I had to have substantial work done the dental bill even if I only pay 20% can get quite high.

5. Vehicle Repairs–Vehicles are unpredictable, anything can go at anytime also the bill for accident damage can be quite substantial. What about the cost of a rental while your vehicle is being repaired because many people cannot just put their lives on hold because their car is in the shop. Transportation is a major necessity for some people, I know it definitely is for me. I like in a small town so we do not have public transport and the cost for taxis are outrageous. Sure insurance may cover some repairs & some car insurance companies will cover a rental but it’s still nice to know you can cover it if necessary

6. Home Repairs– Most renters don’t need to worry about this one (and some continue to rent for that reason). Repairs to things like foundation can run into the thousands, what if you spring a leak in the bathroom and need to replace the floor. Insurance covers some things but like vehicle insurance & medical insurance it does not cover every possible scenario.

7. Unexpected Travel– It’s not something people necessarily want to think about but if someone you love dies are you ready? There’s travel expenses if you live in different areas. What if there is an emergency & someone gets sick and you need to get to them. Are you ready?

8. Funeral Expenses–It is very expensive to die. The cost of caskets, funerals, etc. If your loved one has life insurance you may be alright but what if they don’t? even if they do it won’t necessarily be enough to cover everything and it may take a while to get the money to pay for the services and burial etc.

9. Unexpected pregnancy– ATTENTION ANYONE WHO DIDN’T KNOW-Oopsies (as I like to call unexpected pregnancies) happen. Not everyone who gets pregnant was planning on such. Birth control fails, condoms break, the reasons are endless. Preparing for a child is an expensive endeavor as are the number of years that follow. Not all places of employment pay for maternity leave & even less pay for paternity leave.

10. Natural Disaster or other damaging emergency– Flood, Hurricane, Fire, Tornado the list goes on for reasons your house may be destroyed and you will need to relocate quickly. Charitable organizations will cover some expenses of relocation and help with replacing some belongings, home insurance will also pitch in but moving on a good day with preplanning is expensive, unexpected immediate moves are even more expensive.

There are more reasons an emergency fund may be needed but these are some of the most common . It is recommended that you begin with a $1000 emergency fund and then work on getting up to 3-6 months of living expenses. Next Sunday I will have a post on 10 ways to increase your emergency fund so if you are feeling overwhelmed check back then. 

Do you have an emergency fund? Have you ever had to use it?