Emergency Fund Is Comforting When Job Loss Strikes

Having an emergency fund is a basic principle of personal financial management that many experts talk about. An emergency fund should be readily available cash that could cover living expenses for at least six months, and perhaps longer if you work in an industry where it may be difficult to find a new job or you are not eligible for unemployment benefits.

There was a nice story at the No Credit Needed blog recently about a guy who was laid off from his job - but had been smart enough to save up his emergency fund already. That means that instead of being totally panicked about the lay-off, he is calm and looking forward. One big advantage of having the emergency fund available is that he doesn’t have to scramble to get “just any” job - there’s a risk then that he might get trapped in a low-paying job without the flexibility of time to find a better job in his industry.

His story is encouraging and he wants to make sure everybody knows just how important it is to have an emergency fund, because you can never predict the future - except that now, you can predict that a larger number of people than usual will be losing their jobs, making the emergency fund even more vital.