Financial emergencies and disasters can strike at the most unexpected of times. Emergency funds are designed to protect you from these unexpected financial losses. With an emergency fund, you will have the resources needed to avoid losing all your money and falling into bankruptcy. However, if bankruptcy becomes your only option left, you may want to talk with one of our Tullahoma bankruptcy lawyers about what this involves.
PROS AND CONS OF EMERGENCY FUNDS
Many people see emergency funds as necessary but have little to no motivation to build one. The lack of motivation often stems from the fact that building an emergency fund requires losing money and cutting down on spending. No one likes to cut down on spending, especially when this means not being able to use your money for anything other than essentials.
The pros of building an emergency fund are having an assurance that your money will remain stable during a financial disaster, and you will fully recover. Emergency funds are designed to cover you for things like:
- Medical emergencies
- Car break downs
- Losing your job
- Not being able to find a job for several months
- Major damages to your home
Many financial experts recommend saving at least six months’ worth of your income in your savings account. Saving a whole year’s worth of income can build the strongest emergency fund. However, this may not work for everyone. One of the main cons of building an emergency fund is you need money left over to put into savings.
For people living paycheck to paycheck, putting money into savings can be incredibly difficult. Other financial disaster steps you can take include making a list of what you would need in a financial disaster like:
- Legal and financial documents
- Medical records or history
- Household identification like driver’s licenses, birth certificates, and social security cards
HOW TO MOTIVATE YOURSELF TO BUILD AN EMERGENCY FUND
Building an emergency fund is hard when your motivation is not there. There are a variety of ways to motivate yourself to build an emergency fund. One of the most well-known emergency fund motivation techniques is setting up automatic monthly deposits into your savings account. You can have your bank set this up and have portions of your income set aside each month.
Some people also try methods like self-promises, new year resolutions, and writing out your financial goals. Reminding yourself of why you are saving can put you back on track when you slip back into old habits. Other people go farther and have withdrawal restrictions or penalties set up with their bank account.
BANKRUPTCY LAWYER IN TULLAHOMA, TN
Bankruptcy is the last thing many people want but something that might become your only option when financial emergencies strike. All you have to do is contact us at Tom Bible Law by dialing (423) 690-7712 to explore your options for bankruptcy. Our team of Tennessee bankruptcy attorneys can help you choose the bankruptcy options that work best for your current financial situation. You can find us located in the Tennessee cities of Chattanooga and Tullahoma.