Life is unpredictable. Sometimes, you think everything in your world is going smoothly, and something completely outside of your control comes along to flip everything upside down. This is a reality many of us have encountered in recent years, with the pandemic leading to countless people losing their jobs and missing out on essential savings.
You may already follow tips to stretch your family budget but if you aren’t setting money aside just in case those tips won’t help you during unexpected times. One of the best ways to make sure you can prepare for anything, is to work on building an emergency fund. An emergency fund is a crucial tool recommended by all of the major financial experts in the world today. Essentially, it ensures you’ll have an extra safety net of cash you can access if you ever have to deal with a sudden expense or bill you weren’t fully prepared for. Here’s what you need to know about building your emergency fund.
How to build an emergency fund
Ultimately, an emergency fund ensures you won’t be left completely without any source of extra financial support when something unexpected happens in your life. For instance, if you ended up suddenly losing your job, your emergency fund would allow you to keep paying the bills until you found a new one. These funds can also prevent you from having to rely on loans when you need to pay for something crucial, like a car repair. Emergency funds give you essential peace of mind, so you can minimize some of the stresses associated with day-to-day life. The question is, where do you get started when building your own?
For most people, the first step is figuring how much of an emergency fund you need. The average person will usually benefit from having around three months of their wages set aside just in case they need to pay for bills when they’re suddenly unemployed. If you’re working as a self-employed person or freelancer, then you might want to save back a little extra cash on top of this. Once you know how much emergency cash you need to have saved, you can set up a monthly direct debit, which transfers money from your current account into a savings account you keep separate. Notably, your emergency fund is not the same as your savings for other essential things, like your new home, or a new car.
Life settlements
While emergency funds are an excellent way to give yourself some much-needed peace of mind, they also take a while to successfully build up. With that in mind, it’s crucial to ensure you have another option available if something goes wrong in the meantime. While there are a number of potential options out there to help you deal with a financial emergency, one of the best solutions facing many people today, is a life settlement.
With a life settlement, you can sell your life insurance policy when you need extra cash, and leverage the money as quickly as possible, to help you handle emergencies. While these tools are offering an extra kind of safety net to seniors today, they can be difficult for beginners to understand. With that in mind, it’s important to do your research and learn as much as you can before you take one of these policies out.
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