Financial emergencies always crop up when you least expect them, leaving you in the lurch and wondering how on earth you’re going to get out of it. Some people like to look at borrowing finance when they need it, with short term loans being a common choice. However, if you don’t want to rely on outsourcing your finances, you may want to look at starting an emergency fund. These aren’t that popular anymore, with a lot of people thinking they don’t need them. In reality, an emergency fund can see you through a lot of unexpected issues. So, keep reading to find out why most people don’t have an emergency fund and why they’re wrong!
They Think They’re Too Young
One study showed that the average person aged 18-25 doesn’t think they need an emergency fund. This could be because they still live with their parents and feel that they have them to rely on. However, you can be hit with an emergency expense at any age. It could be an urgent car repair or perhaps an unexpected increase in your loan repayments. These sudden expenses can really put you out of pocket if you aren’t prepared. Don’t fool yourself into thinking you’re exempt from financial emergencies just because you’re young. It’s always best to be prepared.
They Don’t Make Enough Money
If you don’t think that you make enough money to save, then you’d probably be wrong. Unless you’re left with £0.00 after paying your bills, then you’ve got money to save. If you don’t have heaps left over each month, then try saving little and often to build up your emergency fund slowly and steadily. You don’t have to be earning hundreds of thousands a year to save money. Instead, saving what you can when you can, will really make a difference. Something as small as forgoing your daily coffee on your commute can be a good amount to put away each day. By the end of the month, you’ll be surprised at how much you’ve saved.
They Don’t Budget
Lots of people find themselves struggling with their money or find that they’re always a little bit short each month. This demonstrates that they’re living beyond their means and need to assess their spending habits. Creating a budget is one of the best ways to manage your money better and it allows you to start building an emergency fund with ease. Budgets break down your finances into incomings and outgoings, so once you know how much you have left, it’s easy to then put some away. Spend some time figuring out a budget that works for you and you’ll have an emergency fund to protect you in no time.
They Let It Take A Backseat
Unless you desperately need it, you’ve probably not thought about an emergency fund. A lot of people find themselves in this situation, wishing they’d started saving earlier when they’re struck with unexpected payments. The best thing you can do is actually start saving. Otherwise, it will always take a backseat and you’ll never get round to it. There will always be a dinner with friends that crops up or another weekend away, but don’t let them compromise your spending habits. It’s nice to treat yourself once in a while, but when it becomes a regular occurrence, it can damage your saving. Try limiting your expenses and focusing on saving up for your emergency funds. You’ll hit your goal much sooner than you realise!
Too Many Other Things Need Paying First
There are so many things that need paying for when it comes to our monthly expenses, but that doesn’t mean you should forget about saving. Once your bills are paid, all your leftover money shouldn’t be purely for spending. Part of it will go towards your budget, and the other part needs to go into your emergency funds account. In reality, your bills do need paying, but they don’t take up the entirety of your wages. This means you can’t use your bills as an excuse to not start an emergency fund.
They Rely On Credit Cards
Credit cards can be great, but if you always rely on them to get you through an emergency, you’ll soon find yourself spiralling into debt. If you’re consistently adding to your credit card and aren’t actively paying it all off, you’ll only end up with repayments you can’t afford. Instead of always using a credit card in dire straits, actively think about setting up an emergency fund that will see you through. This way, you’ll keep your credit card debt to a minimum and you’ll be able to pay off unexpected bills without worrying about adding to them.
Assuming They Can Borrow From Family
If you’ve always been able to rely on close friends and family, then you might think you can just do that forever. However, this isn’t the case as you may easily lose contact with people or be affected by bereavement. Being able to withstand financial difficulties on your own will put you in good stead for the future too. Knowing that you have an emergency fund behind you will also take the pressure off your family when it comes to supporting you financially. You never know what could happen, so making sure you’re prepared and aren’t relying solely on one person to help you through will allow you to cope with anything.
Emergency funds aren’t just for those with families or older people. Anyone of any age could be impacted by sudden expenses, so knowing you have some funding behind you can really give you peace of mind. Trying starting your fund off with a small goal and then keep building it up from there. In no time at all, you’ll have a healthy savings account, and you’ll feel much more confident in managing your finances. So, don’t wait around for an emergency to hit you. Get saving today so you can be prepared for anything!
