A lot of people know that when it comes to insurance, it is better if you start early. Starting early will give you a good head start and help you save more.
While it is the most common choice to start your insurance before anything else, we would like to beg to differ. In this article, we’ll explain to you why it is absolutely essential to secure your emergency fund first before you go and save for insurance.
There will always be emergencies
If something in this life is sure, that is the fact that change is constant and emergencies are an occurrence. It won’t matter if you already started your investment or other savings, if there is an emergency, it has to be taken care of. The emergency will not wait for you to be ok financially before it comes, it just comes.
You don’t want to end up borrowing from your investments
When an emergency arises and you don’t have a fund to tap into, you will have no choice but to prematurely pull out any investment or insurance package that you might have already started. This will result in more loss as if you have started from scratch again.
You don’t want to spend a lot of years fixing your credits
When all your insurance and investments’ early pullout is still not enough, you will have to loan or borrow money from banks or other people. Having loans and debts is like standing in a quicksand, every move you make may or may not pull you deeper into interests and whatnot.
These are the reasons why it is better to complete your emergency fund before you go and get insurance. If you are still confused about emergency funds, click here for an explanation on how to calculate it and when to use it.