Life is full of surprises. Sometimes, those surprises cost money. An emergency fund can help you minimize the financial stress when the unexpected happens.
Here are a few common life events that can put a financial strain on your family:
Job instability or loss
If your job goes away, your daily living expenses stay right where they are. An emergency fund that can cover three to six months of essential living expenses can bridge the income gap and help keep you financially (and emotionally) healthier until you get back on your feet.
Medical and dental emergencies can happen any time and, depending on coverage and deductibles, your medical insurance may not cover all the costs. Your emergency fund can take up some of the slack.
If your car dies and you depend on it to get to work, it is vital to get it back on the road. Unless your car is under warranty, auto repairs will be an out-of-pocket expense. And those costs can run up fast.
Major household repairs
As your house and all the appliances in it get older, things will break. The oven goes cold. The water heater floods the basement. The air conditioner dies during a heatwave. If you don’t have a home warranty insurance policy, you will be getting out your checkbook for the fixes.
The most unfortunate and unexpected expense comes when you experience the loss of a loved one. Last minute travel arrangements are very costly. Your emergency fund can give you one less thing to worry about during an emotionally stressful time.
Don’t have an emergency fund?
If you do not have an emergency fund, start building one today. Evaluate your budget and trim spending where you can to find extra money to funnel into an easily accessible savings account. Use the Home Budget & Savings Calculator to get started. Contribute to your emergency savings fund regularly. Even the smallest amount saved consistently adds up over time.
You can also talk by phone with a Voya financial professional to receive your complimentary Financial Snapshot and review your overall financial wellness. For more complex situations this advisor can help create a financial plan exclusively for you.* To learn more read the article, “Financial Planning Assistance is Here”.
If you cannot build up an emergency fund right now, try these strategies when faced with unexpected expenses:
- Negotiate an affordable payment plan with the company providing the service.
- Shop around for better prices. Get at least three quotes from different qualified professionals.
- Sell items of value that you are no longer using.
An emergency savings fund is part of your financial wellness which helps provide a healthy balance between living for today while preparing for tomorrow. Your fund protects you from having to borrow against your retirement savings or run up credit card debt, both of which could ultimately cost you more than the financial emergency itself.
* For more complex financial situations you can request a personalized financial plan for a fee of up to $1,500.