You are now experiencing a great example of why you must have an emergency fund.
What is an Emergency Fund?
An emergency fund is six months of your spending needs placed in a liquid, safe account. This is typically a savings or money market account. It must be something that will allow you access to the funds quickly and without any principle loss.
We don’t know in what form the emergency will come. But I assure you that something unexpected will happen. It could be that you need a new hot water heater or a major car repair. It could also be a job loss or a medical emergency.
Who would have ever thought we would have a global pandemic like we are now? Well, there have been many times in history where crises like this have happened. It hasn’t happened in my lifetime, but we have seen it in our nation’s history and history of the world.
In God’s word, we are warned of these things happening. (Mark 13:7-9, 2 Chronicles 7:13-14)
The Coronavirus is impacting everyone around the globe. Some will have a tremendous reduction in income and many others will lose their jobs. With an emergency fund, it drastically decreases the potential for a financial disaster. Without an emergency fund, one may be left to running up credit card debt, foreclosing on a home or possible bankruptcy. The government will not bail you out.
I preach this to everyone – to clients, the classes I teach and the guys that I mentor.
It sounds so simple, but few people have emergency savings. A Bankrate study in 2019 shows that 28 percent of U.S. households have no emergency savings. Only 18 percent of Americans say they could live off their savings for six months.
In 2019, 60 percent of Americans felt the economy was strong. When we feel things are going well, we don’t see a need for savings. We spend it. Some think, “Why not? Everyone else is spending like that and throwing caution to the wind.” Others say, “Let’s use what savings we have to buy a new car or a home project rather than save up first.”
We easily forget what could happen. We become complacent and believe disasters can’t happen again. Don’t get comfortable and complacent. This world will throw us curveballs. We must be prepared.
Proverbs 21:20 says, “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” The wise anticipate future needs while the foolish consume their resources, not considering the future. We are to prepare for short-term emergencies that will happen, rather than spending selfishly with no regard of taking care of our family’s needs.
In the weeks and months ahead, families will face hardships. This is a historical event that will be remembered and studied for many decades. Hopefully, we will learn great things from this and grow personally. One important thing to remember is that an emergency fund is a necessity.
From now on, we may even call it the “Coronavirus Fund.”
We don’t know when or in what form an emergency will hit us. But it will. Be prepared!
If you need help getting started, contact us. We’re happy to help.