As the economy is constantly fluctuating with the greatest amounts of changes in obligatory government spending, it is becoming more evident that people will be needing to tighten up on their budgets. As a great amount of the nation’s population struggles to consistently make ends meet, there have been experienced tastes of what it feels like to live paycheck to paycheck. In these struggling cases, one may wonder about what measures will be taken in case there is to be an emergency. A family that does not earn enough income to be able to purchase health insurance might find that they are in the most difficult of times in the case of an unfortunate health emergency. Therefore, it is imperative to ensure that individuals and families are constantly working to purchase only what they truly need, while setting aside an emergency fund for the possibilities of the most unexpected events and incidents.
When setting aside a certain amount of money for an emergency fund, the saver must realize that they should only live within their means. Meaning, if the top-earner of a family of four is making $40,000 annually, they should not be worrying about how to make payments on a new edition of an expensive and high-end vehicle. Instead, they should be set with an obligation of making small payments on an economical and inexpensive car, or have already paid off on their new and lower-priced car, or even a lower-priced used car.
As a lower or middle-class earner of income, there should be a practical budgeting plan set for their expenses. A good plan for setting aside a dependable emergency fund would be to save as much money as possible after obligatory living expenses. However, in order to keep one’s sanity while still having the opportunity to enjoy life, they should set aside an amount of expenses their budget for miscellaneous expenses. Miscellaneous expenses can consist of entertainment such as movies, nightclub, parties, or vacation. Even though lower and middle-class earners may not be making as much money as the higher-class earners, it does not mean that they are not working hard. Therefore, they should still treat themselves for the work they do.
Emergency funds may be needed to be used for many reasons aside from accidents or health problems. For example, a college student that had set aside enough money for their textbooks may have thought that the amount they saved was enough, until they realized that the cost is actually much more than they expected. In this case, the emergency fund can be utilized in order to cover the remaining expenses of their textbooks. The same concept can apply to a child’s college tuition expenses. The child’s college funds may have accumulated to a great amount, but with tuition rates increasing, enough may not have been saved as the parents may have thought. In this case, an emergency funding to fall back on would be greatly beneficial.