Do you, a young, healthy professional, need an emergency savings account? Duh; of course you do. But many 20 and 30-somethings just don’t have one. An emergency fund is usually classified as three full months of your living expenses, but a couple thousand dollars is a great place to start. If this seems like an unreachable goal, consider the following:
Health care is ridiculously expensive
I recently had to take my toddler to the ER for a head injury. (Scary, I know. He’s totally fine, BTW.) We have decent health insurance, but the visit still cost us $400 out of pocket. Without an emergency fund, that would have been a huge hit to our monthly expenses. Lots of young people still don’t have health coverage, or only pay for catastrophic policies. Meaning you need some money in the bank to hit the doc-in-a-box when you come down with the flu. Or need a tooth pulled. Or have to get an emergency X-ray.
Your hybrid has over 100,000 miles on it
Even if you treat your car with the utmost care, the day will come when you’ll need to drop $700 on new tires or risk hydroplaning into oblivion during the next downpour. Having an emergency fund set aside will protect you from the gut-punch that is needing to replace your whole AC system in the blistering heat of summer.
An emergency savings account protects your credit
If at all possible, you don’t want to put emergency expenses on a credit card. If you need to use credit for a big-ticket purchase, you may end up spending way more in interest than you bargained for. And in the worst case, missed payments hurt your credit big time.
Your grandma is in the hospital and you need to fly home right away. You get in a fender bender and the other driver is uninsured. Your hot water heater explodes. Or maybe you lose your job, or decide to resign. Life is complicated and the unexpected happens every day. Crap happens. And you can protect yourself from mountains of migraine-inducing stress just by planning ahead. If you don’t have an emergency fund set aside now, start putting one together today. Calculate your expenses, and aim to set aside three months of expenses within the next six to twelve months. It won’t be easy, but you can do this!