Why a Solid Emergency Fund is the Foundation for Financial Success

Each person has their definition of financial success. Some want to be able to go shopping without looking at the price tag or travel spontaneously. Others dream of having their own home after years of renting or saying goodbye to the daily hassles of commuting by getting a car. 

Whatever financial success may look like to you, having a solid emergency fund sets you up for that success. Here’s why: 

Preparing for emergencies helps you set your priorities straight. 

As they say, it’s not just about having the funds set aside for a rainy day. It’s equally important to know when to use those funds, and this is not something to take lightly. 

A sudden illness or losing your job are big examples of life-changing emergencies, but there are many other smaller emergencies we often have to face in life. To help you determine what counts as a real emergency, you can ask yourself: “Is this something that impacts the way I live on a day-to-day basis?” While you can likely live without the latest gadget, not fixing your home’s roof means dealing with leaks every day and this can cause unnecessary stress.  

This practice of assessing how certain expenses can harm or contribute to your daily life is a good foundation for financial success. 

You’re able to work toward financial goals without being derailed by emergencies. 

Have you ever experienced saving up for something, only to reallocate those funds to home repairs? Or feeling stuck in a job you hate just because it can pay for medical treatment you couldn’t otherwise afford? Having an emergency fund can help you get out of such situations. 

When you build an emergency fund, it’s the same as including unforeseen expenses in your budget. This means you’re free to look at the rest of your budget and set financial goals accordingly, whether that’s traveling, pursuing further studies, or even saving for retirement. 

The emergency fund also allows you to make decisions without panicking about your finances. So, if you’ve always wanted to shift careers, you can do so knowing that you have an emergency fund to tide you over during your unemployment. You can even take risks in investing your money and making it grow since you know that you’ve set aside funds to cover any emergency. 

Go through life with the peace of mind that you’re ready for any emergency. 

An emergency fund acts as a shock absorber against the unexpected blows that life delivers. Thanks to this fund, you don’t need to make decisions that are dictated by your financial situation. 

For instance, in something as simple as home repairs, your emergency fund ensures you can afford more than just a band-aid solution and maybe even give you the chance to upgrade to better, more long-lasting options. For bigger issues like a sudden illness, the emergency fund makes a big difference in treatment options and medical facilities available to you. 

And even if you need to quickly augment your emergency fund, knowing that Salmon Credit is there for you is peace of mind. It works just like a credit card where you are given a credit line of up to PHP50,000, and you pay interest only on the amount you used. Plus, you can use the money repeatedly, which means you don’t need to reapply every time you need cash. Just download the Salmon app on iOS and Google Play to apply– all you need is one valid ID! Learn more about applying for Salmon Credit here. 

Life is less stressful when you know that unforeseen expenses won’t catch you by surprise, so start building an emergency fund to get on the road to financial success.