Life is really unpredictable; you don’t know if you’ll have a job at the end of the day or if you’ll get into a car accident on your way to the office. For the most part these things don’t happen very often but they do happen from time to time. Being monetarily unprepared for emergencies can make these life moments that much more challenging and stressful.
For most people this translates into having savings set aside for the “just in case”. Some people call these an emergency fund; I’ve even been reading a blog (Matt’s Money Blog) that is dedicated to building up such an emergency fund. Personally I don’t have a proper emergency fund or savings set up. I’m in the process of saving for a wedding so if something really pressing comes up I can lean on this money even though it’s not earmarked for that. This money is a start because in the past I was literally going from paycheck to paycheck which would have made any kind of unexpected expenditure rather impossible.
I’ve heard many recommendations on what your savings or emergency fund should be ranging from setting aside 10% of your pay forever more to having 3 months of living expenses always available. Now for some people this isn’t realistic, heck it’s unrealistic for me and I’m no longer scrambling from pay to pay. But I have been setting aside $50 per pay; I’ve now got $1400 set aside. I’ve been putting the money into a mutual fund instead of leaving it in my bank (can’t spend it if I don’t see it in my bank account). It’s a silly little trick but it’s been working.
The benefits of having money saved up in an emergency fund far outweigh having to deal with the curveballs life throws you without it. Don’t be too secure in your position in life to think that something like loosing your job can’t happen to you and that an emergency fund is a waste of time. You have to remember that huge portions of your life are in some way beyond your control. I’m not trying to spread doom and gloom because most of the time everything is alright; but once in a while something comes along that puts additional financial pressure on you, this is where being ready for emergencies comes in.
If you’re ready for life’s little road bumps, something like your car breaking down doesn’t become a serious stress issue.