You’ve probably heard more times than you can count that you should have savings put away for a rainy day. You may have also heard the old phrase that one size does not fit all.
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There are several different scenarios where it might not necessarily make sense for someone to have an emergency fund. This is not to say that you should not be prepared for emergency situations, but perhaps there are things that fall higher on the priority list than an emergency fund at this point in your life.
Pay off your debt
If you are or have ever been in debt, you can understand the pressures that you feel by not being able to get out from under the debt. Having these types of pressures on you can feel like a present day emergency. If you find yourself with extra cash and you have debt, throw it all towards that high interest debt. Building yourself a savings account is not beneficial when you have debt looming over your head.
Save for Retirement
There is no component more valuable than time when it comes to saving for your retirement. By investing in solid investments, the value that you will derive from invested money far exceeds any amount that you can accumulate at a low interest rate in a savings account. Not to mention that certain retirement accounts can double as an emergency fund.
If you have managed to live below your means and have no debt to speak of, you may be one of those people who do not need an emergency fund. Instead of allowing your money to sit accumulating small interest payments, consider investing it in a taxable account. A good option to consider is an investment that pays high dividends. After a period of time, these dividends can grow to a substantial amount that can count as income or money to put towards a true emergency fund.
Investments that are Accessible
It might already be the case that you have an emergency fund and you don’t even realize it. There are many examples of investments or items that can easily be turned into cash or withdrawn from. The key to these types of investments in ensuring that there are no penalties associated with converting to cash.
Knowing that you are covered in the event of an emergency is often times more valuable than you may realize. The stress that can be associated with unpreparedness can cause havoc on many aspects of your life.
Having a little foresight in planning (as much as you can for an unexpected event) can save you and your family much heartache. It doesn’t take a lot to get started, and every little bit counts. The earlier you start that faster you will be on your way to financial security.