There’s no short of reasons why you should have emergency savings. I’ve got a number of pretty common personal crises listed here, but there are plenty more; and likely I’ve left out some that are even more devastating than the ones I’ve listed.
If you’re the kind of person who prefers to see a few financial emergencies listed plainly so that you can get:
- Motivation to really kick yourself into gear and get that emergency fund rolling, and/or
- Clarity with regards to how much emergency savings is enough for you to get through the majority of devastating financial emergencies;
Well, this is a good place to start.
If, like quite a lot of people, you are currently living month to month and are looking into this kind of thing to give yourself the motivation you need to start saving: good on you. You’ve made an enormous step. Find out how you can save painlessly without budgeting by reading this article, and “cash in” on that motivation (pun obviously intended).
If you’re here for the second reason, and you clicked through to see what kinds of financial emergencies could be devastating for you if your savings funds just don’t happen to be big enough, again: good on you. You’ve obviously got your $hit together and you’re ready to handle more. So let’s take a look.
14 Emergencies You Won’t Want to Go Through With Too Little Money Saved
1. Job loss
You think it won’t happen to you until it does. Not at all a fun way to test your emergency savings account – especially if it takes a long time to find a new job. If you’ve got a family and a mortgage, and if you happen to be the sole earner, this one can be the definition of devastating to have to deal with.
2. Your spouse loses his/her job
If you’ve got two earners in the house, one person losing their job is not so bad, but it can still wreak a lot of havoc to a household that’s living month-to-month or hasn’t got too much saved up in the bank. Scaling back spending a full salary is hard, and though it can be done, it’s much easier if you’ve got savings to help make do.
3. You need to move to get a new job
There will be times when job loss isn’t the only devastating thing that happens – you’ll also need to re-locate to find a new job since there are better opportunities for you based on what you do elsewhere. Life without a job is expensive. Moving is also expensive. It’d be hard to manage dealing with both these financially draining issues at the same time, but completely possible, especially with the help of some emergency savings.
4. You or a loved one has a medical emergency
No one wants to think about what happens if a medical emergency takes place and you just don’t have the cash to pay for it. Especially if insurance won’t cover all of it. You obviously want to be healthy, and that will and should take priority, but when you’re already down on cash, expensive health bills can leave you financially devastated for quite a long time. A hard one to prepare for since you never know what kind of illness you or a loved one might get, and you never know how much trouble insurance will give you.
5. You or a loved one has a dental emergency
Same ball game as the medical emergency – sometimes bad things just happen to your chompers and you need to resolve the issue before it gets worse. If you stay on top of your visits to the dentist this one obviously should not be too much of an issue for you in your life, but in case somebody needs an expensive root canal, it’s best to have a good chunk of money stashed away.
6. Emergency pet care
Sometimes we let ourselves believe that pet sicknesses aren’t too much of a big deal to have to pay for. Yes, this can be true most times. If your cat or dog gets worms, you probably won’t be in any financial distress, but there are times when more expensive medications and procedures have to be done for your pet to be healthy, and with your cat or dog or ferret as a part of the family – I doubt you’ll want to say no to that expensive emergency health care price tag. Assume if you have a pet, he or she will be sick at least once in his/her life and do yourself the favour of saving up for it, just in case.
7. Unexpected home repairs
This is one of those financial emergencies that can lead to complete disaster if you let it. One thing going without being repaired for long enough can lead to other things becoming damaged or breaking – you need to stay on top of home repairs if you’re going to have any chance of making sure you don’t incur even more charges for slacking on getting those repairs done. Not fun and can be very expensive, depending on what’s been damaged.
8. Unexpected car repairs
I feel like anyone who has a car has had this issue already, but chances are good that no matter how many times you’ve had to have unexpected car repairs done in the past, if you’re still driving, you’ll have to deal with that issue yet again. It’s probably the most annoying problem on this list to have to deal with, as it often means dealing with sketchy mechanics unless you know someone who’s actually trustworthy and won’t take the mic out of you.
9. Unexpected car replacement
When you end up in a car accident that leaves your car totaled, you really do end up in a tight spot. It’s hard enough buying a new car when you’re planning on making that kind of purchase – if you have to buy a new one because you were in an accident and haven’t even saved up as much as you’d need to replace your car, it can set you back in terms of debt quite a lot. While, if you buy cars completely new, it might be hard to be able to set aside enough cash for a completely new car in case something happens to the one you currently have, it’s probably your safest bet in case you do end up in a car accident.
10. Emergency travel (to visit a dying friend or relative)
It doesn’t matter who you are, chances are you know someone well who lives in a different city or country, and if you’d want to be there for them if they just got a terminal cancer prognosis – this is one that could unfortunately happen to you. A very unfortunate situation to have to be in, and one that would be financially draining as well as emotionally draining.
11. Funeral costs
What happens if the terminally ill patient is someone you’re responsible for – like a parent? Chances are when it comes to funeral costs you’re going to have to front the bill. No problem, anything for them – they sacrificed a lot in their lives for you. But it’ll be a lot easier to have to deal with these costs if you have enough saved up in the bank to handle it without batting an eyelid – or borrowing.
12. Large tax bill
“In this world nothing can be said to be certain, except death and taxes” – Benjamin Franklin.
While we can hope those taxes don’t take a lot out of you, if you haven’t saved anything up in case they do, you’re in a bad spot. Make sure you have enough to cover them, no matter how high they’re likely to be, and you’ll be all the better for it.
13. Natural disasters
These don’t have to be too serious. Though yes, if you live in hurricane central and you already know to prepare for it, chances are you’ve got some money stashed away for natural disasters already – even if you live in a place where natural disasters don’t typically take place, you could still have to deal with a bad situation due to terrible weather. I lived in Toronto, and while Toronto does just fine in terms of natural disasters overall – the houses in the area I lived were susceptible to flooding. Not fun to deal with and while home insurance will often cover your basement renovation for you, if it happens again and again, the coin purse may begin to close. Or at least premiums will go up.
Make sure to have some money set aside for weather screwing with your home and car even if you don’t think it’s likely.
14. Family member or friend needs help
You might think that absolutely nothing could make you put yourself in a bad financial situation for a friend or family member, but I feel like that’s not taking into consideration what their financial emergency is over.
If a friend is deathly sick and needs a one-time emergency procedure, if a parent needs help for the next couple months until their retirement pension kicks in to pay off their mortgage payment or they’ll lose the family home, chances are you’ll want to say yes to being able to help out in a pinch. Can’t do that easily unless you have savings.
Potentially Devastating Financial Emergencies I’ve Left Out?
Can you think of any more financial emergencies that should be on this list?
Have you had to deal with any financial emergencies yourself in the past? Were your savings enough to get you by unscathed? Did you go through a tough time that then motivated you to save more?
Do you think any of these financial emergencies would be harder to deal with than others? Which do you think would be the most financially devastating?
Share your thoughts with me in the comments!