Financial Emergencies are Still Emergencies
When you hear someone use the term emergency it is generally associated with a medical emergency of various sorts. One definition of emergency is: “an unforeseen combination of circumstances or the resulting state that calls for immediate action.”
By any definition, there is an urgency associated with all emergencies, dealing with them successfully is time sensitive. Medical emergencies are themselves almost always mostly “unforeseen” and “unexpected.” But in truth, financial emergencies are to be expected, every year, like clockwork.
This is why the MarylandSaves Retirement Savings program has an emergency fund feature. MarylandSaves is a state-sponsored payroll deduction program that helps savers establish and contribute to a WorkLife Savings Account, which is a Roth IRA. When they do, the first $1000 contributed to the account stays in an emergency savings fund that can be accessed by the saver to help take care of a financial emergency.
Financial emergencies are certainly manageable if you are prepared, but they are on their own timetable, and they seem to happen when you least expect them and tend to come in three major buckets: Equipment, things you own; nature, things you can’t control; and family, things that matter most. At least one of these types of financial emergencies can be anticipated each year, but that doesn’t make it any less challenging when you have to pay for it immediately out of your pocket. These are some examples of the things that can upset your financial apple cart:
Your stuff. All the equipment, the things you own, or at least are responsible for, including the car, the tires, the battery, the check engine light; including personal technology, such as the phone, laptop, and printer. Things in your home, such as the air conditioning and heating unit, major and minor appliances, the lawn mower.
Acts of nature, like when a tree falls, or needs to come down, or your basement floods.
Your family, and that includes the pets, an x-ray at the vet can be $1500. Grandparents lose hearing aids, kids get sick, need uniforms or equipment, or wedding bells start ringing.
To be happy is to be prepared, because these kinds of things are bound to happen, which is exactly why MarylandSaves structured the flexibility of the emergency savings feature into its retirement savings plan.
If your workplace doesn’t provide a retirement savings plan, look into MarylandSaves; if you do have a retirement savings plan, good for you, just make sure you are also prepared for all those unexpected moments that make life interesting.