Do I Need an Emergency Fund? – 8 REASONS That Say YES!

emergency fund

Do I need an emergency Fund? How can I have an emergency fund if I hadn’t one till now? Is it necessary? My life is well enough then why do I need to have an emergency fund? If such questions came to your mind after reading the title, then this post is going to help you a lot. If you feel that because of having a comfortable life and high paying job, you don’t need an emergency fund, think again. No matter how financially strong you are but life will always find ways to throw curves at you, beyond your expectations. Even if you can’t imagine a scenario where you will be in need of rescuing then remember that life always gives beyond expectations. Whether it is happiness or hardship. Unexpected expenses can tuck away your meager savings. Hence, it is advisable to have four to six months of salary as an emergency fund. This can be your saving grace during your tough times.

Here are some situations, where you might need emergency funds. You can easily relate yourself with these situations. These are the 8 reasons why one needs an emergency fund or should have and emergency fund:


It can be very difficult sometimes to get another job which would pay you the same level of income, that too in a quick time. While stuck in such a situation, if you are having emergency fund has at least two to three months of salary then you can take up the first job that comes along to you- while continuing your search for a better job. Otherwise, you will be forced to take up the very first job which comes to you even if you don’t like it.


This can be disastrous. Illnesses are something for which you can never be prepared. If you are too sick, your management team might fire you. You will lose your full salary. An emergency fund can help you to survive until you recover from illness. Even if you have medical insurance, you may need to pay the bill first hand and then claim for insurance. It can happen that your medical insurance plan doesn’t cover every medication. On one hand, you will be struggling with illness and on the other hand, you may find it difficult to pay the bills. Emergency Funds can be very handy in such situation.


Your best friend or your relative moves in with you as they are facing crisis. Now what? You were struggling with your own crisis but now it is multiplied by two. Having an emergency fund will help you in taking care of someone close while you can stay afloat. There are always some people in everyone’s life to whom they can never say no. So this situation cannot be denied.


You saw an amazing bargain or discount on something which you were looking for a long time, but it’s still costly. Or you realize a day or two before your spouse/ partner’s birthday and anniversary. An emergency fund can help you in such tight situation where you have no time and all you need is money. You can easily buy a perfect gift for them without burning a hole in your pocket or by disrupting all your monthly budget plans.


You are being promoted. Congratulations. But wait, the promotion comes at a cost of you moving to a totally new place. Moving to a new place can be expensive. You will need an emergency fund to cope up with your expenses in such a situation. This was a positive and favorable change. What if the company in which you were working shuts down overnight? Or company decides to shift office and you realize it will be too tiresome from your correct flat to travel to the new office destination. Unfortunately, without a buffer of savings; you will struggle a lot, both financially and emotionally.


If you are a working class person, very few of you would be living in owned flats. Most of us have to rely upon rented apartments. What if you are asked to vacate your flat in a short notice without any warning? It happens many times where you aren’t given a proper reason and landlord or flat owner just asks you to vacate your flat. It can truly be a budget-buster.  Moving to a new flat is indeed very costly, as you have to move all your belongings with you. Also, you will have to take up the very first option of house or flat which comes to you as you cannot remain outside for long. So in such a tight situation your emergency fund will protect you from dent in your pocket as even in a new place you will have to come up with funds right away.


You lost your credit card. Or your debit card gets stolen. Although, you will soon recover from such incident. But it might take a while to sort it all out. You may not have access to your credit cards or debit cards as you would have requested the bank to seize them.  For some days or perhaps, weeks, you will have to rely upon you saving as in some cases; bank even put the primary account on hold. If you a separate emergency fund, it can be lifesaver for you!


You should never ever forget to pay taxes or bills! It can happen sometimes; that you forgot to pay back your bills or your credit card was declined. Some people even forget to pay taxes on time. So if you missed the deadline of advance tax payment, better you pay it off as soon as possible. As it is not a great idea to mess with tax officers. If you have an emergency fund, you can go ahead and clear all your dues, without losing a large chunk of your salary.

All these things and many more can collapse your financial freedom. They might force you to take loans. Loans are stressful. It damages your finances. Above mentioned points can be minimized by maintaining an emergency fund. To open an emergency fund, all you need to have is a firm will power, strong commitment towards yourself and some cash. Just open up a savings account and vow to yourself to put some money in it each week or month. And forget about the account until or unless you face an emergency.  Never rely on this money. Always tell yourself that it is for an emergency. It’s not your saving which you will use to by the bike you were waiting for so long. Ask you bank to do it for you automatically, so that you don’t have to think about it.

When you face an emergency, this emergency fund will be there to save you. If you have an emergency fund, you can tackle the hardships which life will throw at you. It is better to stall some of your advanced planning to save money for an emergency fund, rather than being in crisis. If you still have not started an emergency fund, start it. One day you will be glad you did it.


  1. Definitely agree with you there! Even if you’re financially secure, or at least you think you are, having that fund tucked away for everything and anything life might through at you, will surely help you sleep better at night. I know I certainly do knowing I’ve got enough to cover a rainy day!

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