There are lots of reasons you might need $1,000. But recent national polls show under 40 percent of U.S. adults have the funds to cover an unplanned $1,000 expense. Given such a cost can strike at any time, this is chief among the many reasons an emergency fund for bills is important.
Unexpected Costs Should Be Expected
Creating and sticking to a budget is one of the best ways to keep your finances in good working order. Knowing how your expenses and income are stacking up against each other on a monthly—or even weekly—basis can help keep financial woes at bay. But even the best budgeters can be caught off-guard from time to time.
There are some things in life that just fall outside of your ability to plan. It can be extremely difficult to deal with unexpected expenses that life throws in your way. But you can deal with them much more effectively if you’ve put money aside in an emergency fund for bills. No matter what kind of bill comes due, having an emergency fund will give you more flexibility to meet the challenge.
It Can Help You Avoid Accumulating Debt
What are your options if you have an unplanned or unexpectedly large bill come due? If you don’t have any emergency funds set aside, your options can be pretty spare. Some people might be able to borrow money from family or friends to pay for large, unforeseen expenses. But not everyone is lucky enough to have this kind of support system.
Those who don’t have an emergency fund or any other option for paying surprise bills may be forced to take on debt to compensate. This can be a dangerous proposition, as it can begin a cycle of having to continually take out debt to pay bills. Having some amount of emergency fund can prevent this from taking hold.
Some Bills Are More Expensive Based on Usage
Depending on how your utility bills are calculated, there might be some months where you pay significantly more than others. Recent winter storms in Texas led to a severe supply-demand issue in natural gas, which caused gas companies to have to pay higher prices to keep up with what was being used by customers. These costs were then passed on to those who used gas to heat their homes.
This is just one example of how utility bills can come with unpredictably high costs from time to time. Extremely cold weather is one of the more common causes for this. No matter how you heat your home, if you pay for heat, it’s going to be more expensive during cold winter storms. With an emergency fund, you can at least be prepared for some of these seasonably high costs.
You’re a Single-Income Household
There are many challenges that come with being the only income in a household. But regardless of whether you’re single or living with others, having only one income puts a lot of pressure on keeping that source active.
Losing a job or somehow being out of work when you only have one income stream can be a dire situation. The burden can be lessened some, however, when you have an emergency fund to fall back on for bills. When you have a bit of money to pay your necessary expenses, you can navigate your way to another opportunity or the resources you need before running into serious financial hardship.
Keep Your Goals In-Tact
Running into a major, unplanned bill can be like getting hit by a tub of bricks. It can really take the wind out of your sails, which especially hurts when you’re working toward something. An emergency fund can give you the stability to keep your goals intact even when things get a bit messy.
An emergency fund for bills is worthwhile for everyone who has the means to achieve it. Putting aside money for a rainy day can help preserve your finances even through the roughest of storms.
