People need a financial cushion to fall back on in times of emergency. According to the Federal Reserve, nearly half of Americans would not be able to cover an unexpected expense of $400 without borrowing money or selling something. This problem underscores the importance of having an emergency fund.
An emergency fund can help you avoid debt and financial instability. It can give you a cushion to fall back on during tough times. This is important because people who experience economic instability are more likely to have health problems and experience stress-related issues. Financial stability is key to maintaining a good quality of life. However, it can be challenging to identify how much you must have in your emergency fund to ensure stability or, at the very least, preparation. Fortunately, you can use these medical procedures as a basis.
Appendectomy
If something is more unexpected in life, it would be getting appendicitis. The medical condition can happen to anyone anytime, and there might not be enough warning signs to prepare you for it. Appendicitis occurs when the appendix becomes inflamed and swells up. This can cause severe abdominal pain, nausea, and vomiting. If left untreated, appendicitis can be life-threatening. The treatment for appendicitis is an appendectomy, a surgery to remove the appendix.
The cost of an appendectomy can range from $1,500 to $30,000 depending on the severity of the condition and whether you have health insurance. If you don’t have health insurance, you will likely have to pay the entire cost out-of-pocket. Even if you have health insurance, you will still be responsible for some costs, such as deductibles, copayments, and coinsurance.
An appendectomy is a perfect example of why people should have emergency funds because once your lower abdomen starts to hurt, you will want to get to the hospital as soon as possible. And if you don’t have health insurance or your policy has a high deductible, you might have to pay a significant amount out-of-pocket.
While $1,500 is on the low-cost spectrum for an appendectomy, it is still a lot of money for many people. This is why it’s essential to have an emergency fund that can cover unexpected medical expenses.
Wisdom Tooth Extraction
Wisdom teeth are the final set of molars people get, but they often sprout at different ages. Unfortunately, wisdom teeth don’t always go in there evenly. Sometimes they can become impacted, meaning they grow in at an angle and become trapped by the other teeth. This can cause pain, damage to other teeth, and gum disease.
The treatment for wisdom teeth is an extraction, a surgery to remove the tooth. This procedure can range from $75 to $200 per tooth if you have insurance. If you don’t have insurance, the cost can be much higher, up to $600 per tooth. Unfortunately, it can happen up to four times in your lifetime. Moreover, it would help if you found a reliable dental clinic to ensure you already have somewhere to go once it starts aching.
Like an appendectomy, wisdom tooth extractions are a perfect example of an emergency fund basis. They are usually unexpected and can be very costly. Wisdom teeth extractions are typically considered elective procedures, which means most insurance companies don’t cover them. This means you will likely have to pay out-of-pocket the entire cost if you need to remove your wisdom teeth.
Six Months’ Worth of Rent or Mortgage
Your rent or mortgage is probably your most significant monthly expense. If you can’t pay it, you could end up homeless. This is why it’s essential to have an emergency fund that can cover six months’ worth of rent or mortgage payments. This cushion will give you peace of mind knowing you can still afford your home if you lose your job or have another financial emergency.
The average monthly rent in the United States is $1,200, so you need at least $7,200 in your emergency fund to cover six months’ rent payments. The average monthly mortgage payment is $1,030, so you would need at least $6,180 in your emergency fund to cover six months’ worth of mortgage payments.
Of course, these are just averages; your actual rent or mortgage payment could be higher or lower. To be safe, you should always have an emergency fund that can cover at least six months’ worth of your rent or mortgage payments.
Car Repairs
Your car is a crucial part of your life. It gets you to work, the grocery store, and everywhere else you need to go. But cars are also expensive to maintain. They need regular oil changes, tune-ups, and repairs. And sometimes, they require significant maintenance, such as a new engine or transmission. These types of repairs can cost thousands of dollars.
If you can’t afford to pay for car repairs, you could end up stranded somewhere or unable to get to work. This is why it’s essential to have an emergency fund that can cover the cost of car repairs.
The average cost of a major car repair is $1,500. But the price can be much higher if you need a new engine or transmission. For example, a new engine could cost up to $5,000, and a new transmission could cost up to $4,000.
Of course, you might not need a new engine or transmission. But if you do, it’s essential to have an emergency fund that can cover the cost.
Final Thoughts
Life is expensive, and unexpected expenses can pop up at any time. This is why it’s essential to have an emergency fund that can cover your costs if you lose your job or have another financial emergency.
