The other day, I started my car and found that it was NOT moving even though engine was ok and gears were in working position. I did drove it couple of days ago before the heavy rains yesterday.
Boom...I could not figure out what had happened to my car. I called up the car repair service and they gave me the estimate of of INR 7,000 for repairs.
The problem: My car's rear wheel's break shoe has broken due to water
logging and rust and had jammed the wheel.
Well, the point here is not about my car but the fund that i created in emergency to get it fixed. I had NOT planned for it but had to pay for it out of my monthly budget and remove some of the other less important items from the list.
But, i have certainly learnt the lesson to create an emergency fund with
this real life lesson. But how many of us really create this fund? In India, there is a tradition that your female head of the house manages the home finances and she knows how to create these kind of funds.
How many times have you seen your mom reacting advertly to emergency situation like this? She would be calm 99% of the time because she knows that she has some money saved in that old rice container in he kitchen which is out of her husband's sight!!
But how many of the new generation guys and gals follow these tactics? I don't know anybody including myself. But belive me friends, these funds do help in real times of need and we should start creating them as soon as possible.
Emergency Fund
We’re all familiar with the standards of a budget. It’s easy to include major recurring expenses like:
- Rent
- Loan EMI
- Utility Bills
- Insurance
- Cell phone
- Groceries
But how many people remember to budget for irregular expenses? Do you include:
- Clothes
- Gifts
- Uninsured Medical bills
- Vehicle (car) breakdown repairs
In order to be prepared for irregular expenses, one should create an emergency fund and keep adding money to it from every month's salary. I have created one for myself now to keep myself safe from a shock and avoid any contingency medicall bills too :)
It’s human nature to feel like the only you have the worst luck when something bad happens for which we’re not prepared. But cars break down, mobile gets wet in rain, people and animals get sick and hurt. Utilities go up and down to the point of pain when the weather is extreme. Bad things are going to happen. But it’s not an emergency unless you make it one.
I know that some people would simply make these expenses by either taking a small loan or make payments using a credit card. But, you will have to re-pay the amount in some days and if you default, you will be paying high interest charges. So, it is going to hurt more than the actual payments.
So, be smart and save money too in the long run. Energency funds helps you keep your mind away from unnecessary stress and also saves you from making unwanted expenses if you are prepared.