Life has ups and downs. With the right safety net, you can weather almost anything, but not many today have the luxury of a safety net big enough to catch them when they fall. With many living paycheck to paycheck, and not enough out there with enough savings to support themselves in case of a high, unexpected cost, everyone must know just where to turn when it comes to financing.
While your personal savings are, of course, an option, there are a variety of instances where you may benefit from applying for a personal loan instead. The unexpected life event doesn’t even have to spell catastrophe. You may have a new family member on the way and consider a personal loan for home improvement to cover the cost of converting the basement or the attic into a livable space.
Many unexpected life events require an emergency fund, but if you prepare for these top events, chances are you will be able to weather through anything:
Emergency funds are designed to help you handle emergencies. A lost job, an unexpected cost, a fine – the disasters that can come your way cannot always be accounted for, but they can be prepared for. You should have an emergency fund that helps you cover your living costs for at least three months, though six months or more is ideal. Prioritize saving until you have this emergency fund covered so that you have that rainy day money and safety net to fall back on in the future.
A new job, a new sale, a once-in-a-lifetime deal, all of these are unique opportunities that you don’t often get to plan ahead for. They can also come with costs you need an emergency fund to take advantage of. A big deal can help you save on something you need or want, but it still comes with an upfront cost. Even a new job can have costs associated if you need to move.
While you may not want to use your emergency fund for these opportunities, you will want to look into financing options so that you keep your options open. Loans are used for a variety of reasons, from emergencies to opportunities.
Changes to the Home or Family
A new baby can be a massive unexpected life event that requires a lot of upfront costs to get ready, even before the baby arrives. The same applies if your parents are moving in with you. If you have a sudden new family member or members coming into your home, and you need to upgrade your home to accommodate them, then an emergency fund will be necessary.
The changes in question don’t have to be new members, either. If someone gets permanently injured and needs accommodations made to the home, then an emergency fund, as well as grants and other financing options, are available for you to consider.
There are so many ways life can take an unexpected turn, and the best way to deal with both the good and the bad is to have an emergency fund and to also know where you can get the money you need should your emergency savings not be enough – or not a good fit.