The past year and a half has been absolutely wild and unprecedented. There was no one who could have predicted the many crazy events that have happened in a relatively short amount of time. Who knew that the world would have to fight off a pandemic or that a few tweets from Elon Musk would cause a cryptocurrency to make national news.
This period in time has been quite unpredictable but it has also been arguably one of the best times for many people, especially from younger generations, to learn a very important life lesson. Life is unpredictable and you should always try to prepare for the worst.
One of the fundamental lessons in personal finance is to always have an emergency savings fund. This is one of the most important building blocks in building wealth and success. The reason for this is because life is unpredictable and you never know what might happen to you. The recent pandemic has been a great example and serves as a teachable event for many who believe that a savings account is useless or unnecessary.
During the early months of the pandemic, the stock market took a huge hit and many people were let go from their jobs and were at very financially stressful points in their lives. For those without emergency savings, they were forced to either liquidate their stocks at one of the worst times or were unable to pay their bills. Fortunately, there were some measures put into place to stop things from completely collapsing like the stimulus checks and other various stimulus policies.
It is exactly these times where having an emergency fund to rely on will quite literally save you from an emergency and help prevent you from having to take a larger loss than necessary. This is a point that many younger individuals generally have a harder time getting used to. For younger individuals it is easier to think that they might not have anything to loser and have time on their side to take as many risks as they are able to tolerate.
This thinking might not be coming from the worst line of reasoning but it is still important to keep some risk aversion just in case of the worst case scenarios. For those that have not started working towards creating an emergency savings fund, try to reconsider the benefits of having one and the peace of mind that it might bring.