If you’ve ever done any research on how to get your personal finances in order, one of the tips you’ve likely read about time and time again is creating an emergency fund. Essentially, it is a savings account in which you store money to use for those moments you weren’t prepared for. It prevents you from having to dip into your budget and helps you to relieve stress as life throws you an unexpected curveball. If you haven’t taken the time to start building one, you could find yourself in a world of trouble. It’s all about preparing for the unforeseen.
What Happens if You Don’t Have an Emergency Fund
Why put money away for later when you can think of so many things you can use it for right now? Well, because you never know when something could go wrong. Should you get sick and need to take time off from work, lose your job, have a car or home emergency, experience a loss or suffer a divorce, these can all have an impact on your finances. Though you’ll have to deal with your emotions during this time, having money in the bank can make it easier. If you don’t have an emergency fund, however, the risks include:
- The matter getting worse – An emergency home repair like a leaking pipe, for example, will only spread throughout the house causing mold and water damage if it’s not taken care of right away.
- Stress – Dealing with an emergency and not knowing where you’re going to get the money from can cause stress. Stress, as many are aware, can lead to a host of things including fatigue, body aches, lack of concentration, depression, obesity, and more.
- Increased debt – If you had an unexpected rise in your energy bill, but don’t have the money to cover the difference, the balance you’re unable to pay will continue to add up sometimes accruing interest and other fees.
- Abuse of assets – It is not uncommon for people to start tapping into resources like their home’s equity, retirement account, or life insurance policies to cover the cost of major emergencies. However, if not replenished, this could leave you unprepared for other life events.
How to Handle the Problem of Preparing for the Unforeseen
Before getting into how to build your emergency savings fund it is ideal to talk about how to get your hands on some cash quickly. As you can see, putting off an emergency for too long can lead to serious consequences. Below are a few quick tips to try:
Sell Your Jewelry – If you live in SoCal for example, companies like Diamonds Forever allow customers to sell gold jewelry in San Diego for cash. But wherever you call home, you can walk into a participating jeweler and have your items appraised. Based on the current market value of the metal at the time, they will make you a cash offer. Another option is to obtain a jewelry loan in which you use your jewels as collateral to obtain a loan that you’ll later repay.
Sell Things Around the House – you’d be surprised how many things you have around your house that can turn a profit. Anything that you’re not using from furniture and appliances to clothes and electronics can be offered up for sale. You can set up a shop online or host a yard sale and offer your goods to someone who wants or needs them.
Try Odd Jobs – If you’re fine with getting your hands dirty, there is another way you can make some quick cash. These are odd and end tasks that you complete for individuals or small businesses for money. You might deliver correspondence, run errands, do yard work, or clean construction sites. You can find opportunities like this through online classifieds.
Quick Tips for Building an Emergency Fund
After you’ve tackled your problem, it is time to be proactive to ensure you don’t find yourself in this position again. Some quick tips to build an emergency fund include:
- Using the above-mentioned fast cash options and placing the money in an account
- Reviewing your budget to cut out unnecessary spending
- Getting a side hustle like blogging or social media posting
- Pay down your debts and increase savings
Life has a way of just popping up on you when you least expect it. Although you may not have much control over how things play out, you can make sure that they don’t impact you unnecessarily. An emergency savings fund can save you from a lot of trouble and help you quickly get out of a jam. If you don’t have one, use the above tips to start building one that provides enough of a cushion for those unforeseen moments.