If you have an amount of money earmarked for emergencies, you should avoid making some mistakes, and whatever your age, income level or living situation, it is important to have some money to save in order to cover unexpected expenses.
In fact, the ideal amount in an emergency fund should be enough to cover your expenses for 3 to 6 months, and as such;
If you lose your job or run into unplanned expenses - like fixing a car or home - you don't have to go into debt to deal with the situation.
Writer Murray Bachman said - in the report published by the American "Motley Fool" website - that if you already have an emergency fund, this makes you in a comfortable financial position, but you should avoid spending the money you saved on these three things:
Investing emergency fund savings
Investing money in things like stocks or digital currency can be a useful way to grow wealth over time, but when it comes to an emergency fund, the best place for that money is simply the bank.
When you deposit your money in a savings account, you guarantee that you will not lose it.
When you decide to invest it, this means that you can lose part or all of it if things do not go in your favor;
This is a risk that you cannot afford, especially with emergency fund savings.
When it comes to an emergency fund, the best place for that money is a bank (Getty Images)
Spend emergency fund savings on non-emergency matters
There's a difference between using emergency fund savings to cover repairs to your car or a faulty water heater, and spending that money on non-emergency situations like vacation or buying new furniture.
No matter how tempting it is to resort to this money that you have worked so hard to save;
Draining the emergency fund savings and then facing big expenses could put you in debt, which emergency savings would help you avoid in the first place, and if you don't have money to buy something that falls into the non-emergency category try to postpone it and save money for it separately .
Lend this money to someone
If a friend or family member asks you to lend him money;
It may be difficult to refuse his request, especially if you have a significant amount deposited in your bank account.
But even if helping someone you care about seems like a noble goal;
If you withdraw money from the emergency fund to lend to someone, you can get yourself in trouble if you face financial hardship later.
Instead, it is best to help that person find other borrowing options such as getting a personal loan.
The writer pointed out that creating an emergency fund takes time, as some people can take years to save enough money to cover the expenses of 3 or 6 months, and if you can achieve this, do not waste these savings on non-emergency expenses, and instead, avoid The aforementioned things to ensure that this money is spent when you really need it.