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Top 5 Key Reasons to Have Emergency Funds by Your Side

Your mom must have stashed away some funds in a jar, just in case some emergency comes up. Of course you might not be subscribing to the same idea, as you tend to have your funds stored in the bank account. The notion of having some emergency funds in place is quite practical and rationale as well. This is because you never know when or where something unexpected might crop up. It is always tough to manage the urgent needs, in case the funds needed are not quite available. Precisely for this reason, the financial experts emphasise more on having an alternative option in the form of emergency fund. At least, you will then have the luxury of having the peace of mind, if for any reason something comes up all of a sudden. It is more ideal that looking for a quick loan, wherein you end up paying more interest rates than what you had actually availed.

Here in below are 5 key reasons advocating why you should have an emergency fund by your side.

Freedom from unwanted stress & complicacies

In case there is some urgency and you are not having the means to resolve it, it then gets difficult to manage the situation. The apparent cash shortage can cause a lot of stress and thus puts you in a dicey situation. But when you have something to bank upon in the form of emergency funds, it does provide some additional relief and much needed boost to fix the process, without having to face too many complicacies.

You are more responsible with Money

All it takes is a small little step. Once you realise the importance of money in your life, you tend to become more accountable. By keeping aside certain amount from your income every month, you will have substantial cash within a short span of time. When you are not quite willing to opt for unwanted expenses, it certainly implies that you are getting better in managing the finances.

Prevents you from making rash decisions

What is the point of using your credit card or other means, when you have the funds safely kept aside? If you are successful in creating a safety funds, there is nothing much to worry and you are not anymore require to make any rash decisions.

No more reason to depend on others

It always makes a lot of sense to be financially independent. When you are financially independent, the tangibility allows you to have more leverage, which always comes in handy, while dealing with an unforeseen crisis. The fact that you have an emergency fund makes you more confident and you are more willing to confront the challenge, without seeking any external support.

You will never fall into debt trap

In case you are not quite having the funds, then it means you will have to rely upon other options. For instance if you are using a loan to deal with the crisis and fail to make the repayments on time, it then means you will get into debt, which is always a major concern. On the contrary, if you had saved some funds for circumstances such as these, you will never have to worry about debt or making hefty repayments to a lender.

What if you are not having any emergency funds and need some quick relief?

It is always a good idea to have a contingency plan in place. But there are moments, when you genuinely struggle to manage the cash flow. Rather than undertaking much of any stress, it is preferable to act as per the prevailing circumstances. There are solutions, which you can rely upon provided you know where to look at. If you really need some cash assistance, then you can consider applying for a short term loan. The loans will provide you the funds to deal with your immediate crisis. As the funds are deposited into your back account, it does help you to handle the situation with far more ease. However, for your own convenience, it is ideal to avail the loans only when you are left with no other alternative. After all, it is imperative to maintain the financial balance.