An Emergency Fund Brings Peace of Mind
How do you define success? I define it as constantly improving in the following three areas:
Only when these three areas are in harmony can you focus on your Soul Purpose, reach your full potential, and achieve real success.
A recent survey conducted by Northwestern Mutual asked respondents to pick five attributes they feel are signs of success. The top two answers were spending quality time with family and being healthy. Only 13% of respondents indicated a high salary is a sign of success. Approximately 48% of respondents stated that being financially prepared for the future was a sure sign of success.
The article goes on to say:
Of all the attributes associated with success, it makes sense that so many Americans would value financial preparedness. People want to be ready for anything that comes up, and they don’t want to be worried about money all the time. Being financially prepared means having savings, a budget, and an emergency fund so you know you can handle anything that comes along.
Another survey by PricewaterhouseCoopers asked workers to describe what financial wellness means to them, and 34% said that it means not being stressed about their finances. That fits with responses from 62% of millennials and 55% of Gen Xers, who said they worry about not having enough money put aside for unexpected expenses.
Nothing can strike fear in you like a large, unexpected expense (e.g., medical bill). When you have no savings or emergency fund, the panic starts to set in. You don’t know where you’re going to get the money from and odds are you might turn to a credit card to make ends meet. And if you don’t pay that credit card in full and on-time, that emergency bill will become even more expensive once interest charges and late fees are added.
Recently, I bit into a nut bar and felt something really hard. I fished it out of my mouth and discovered that part of my tooth had broken off. Two trips to the dentist and $700 later (with insurance!), I was fitted with a crown to protect my tooth from further damage. My dentist told me there is a 15% chance I still might need a root canal in the future, which of course will cost hundreds of dollars more. Fortunately we have insurance and an emergency fund for bills like this, so I charged the $700 on my credit card — to get the points — and paid it off in full at the end of the month. No stress, worry, panic, or losing sleep. This peace of mind can only be attained by having an emergency fund covering 3–6 months of living expenses.
Bad, expensive things are going to happen, but you can avoid the stress by routinely setting aside money to cover them.
Start an emergency fund today and secure your own peace of mind.