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Why do I need emergency savings?
Everything you need to know about emergency savings, regardless of your financial situation
Imagine you’ve just returned from a great vacation abroad. You find out your close friends are getting married across the country in a few months. You go ahead and book your plane tickets, not wanting to miss out on the cheap airfare. You forget this is also the week you have an optometrist appointment and need to buy new contacts. Like always, rent is looming just around the corner and your checking account isn’t looking so hot. Unfortunately, payday isn’t for another week. What do you do?
These are all emergencies within your control. Save for rent and contacts (assuming you’re out), planning better could help you avoid this scenario. However, what happens when your car breaks down, your refrigerator stops working, and you need contacts all at the same time?
If you don’t have emergency savings, you might be able to cover the expenses on your credit card, but you’ll wind up paying more if you don’t pay it off in the same month. As of 2014, 1 in 4 Americans have no emergency savings whatsoever.
