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6 Consequences of Not Having an Emergency Fund
6 Consequences of Not Having an Emergency Fund
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6 Consequences of Not Having an Emergency Fund

Ian Job
July 25, 2022

You've probably heard that having an emergency fund that can cover three to six months of your living expenses is a prudent financial decision.

Although many people find it difficult to save money, it is worthwhile since failure to do so could have serious implications. These might include accruing debt, struggling financially after losing a job, and failing to achieve your ambitions, such as becoming a homeowner.

Here are six consequences connected with not having an emergency fund to help you become motivated to do so and grasp the value of saving money for the unexpected. They will not only get you pumped to begin saving, but you'll also be more prepared to reach your financial and lifestyle goals, as well as deal with life's ups and downs.

1. You Might Have to Rely on High-Interest Loans to Pay Your Bills

Without an emergency fund, you might struggle to get funding from just about any source. A desperate situation may force you to borrow to cover the situation. But lenders are also keen to scrutinize your income. If none come in due to job loss, they might subject you to high-interest loans.

There is a high probability of defaulting on the same because you do not have a fallback plan in the first place. Take note of the vicious debt cycle that is about to happen. It won't take long to ruin your credit history and for auctioneers to knock at your door. Losing crucial assets could break you even further.

Have you ever heard of the adage that it pours when it rains? Oftentimes, during such hopeless circumstances, that’s when emergencies become countless. If it's not a stalling car, it's a sick child or school fees issue. And with a poor credit history, you may never again borrow when another emergency occurs, leaving you stranded and at no one's mercy.

But suppose you have a robust emergency fund. None or less of the above inconveniences would happen. Even if the emergency is draining, the available safety net shields you from the shackles of high-interest loans and debt. 

Read Also: 7 Financial Emergencies Everyone Must Be Prepared For

2. You Might Have to Sacrifice Your Necessities to Pay for the Unexpected

If you have a regular income, you may not notice the intense heat as quickly as someone with an irregular income. Still, if you don't have an emergency fund, you may have to make dramatic changes to your monthly budget to account for the unexpected.

When you're strapped for funds, you may have to settle for low-quality solutions like not-so-good hospital treatment because you do not have enough money for proper medical treatment.  You may also be obliged to skip some tests and procedures.

Another worst-case scenario can be car trouble,  causing delays in attending to your business or reporting to work because you don't have spare cash for transportation.

What about that total loss of access to utilities because you do not have an emergency fund to help? Think of the water bills or lack of tokens for your electricity in the house. You might even lack money to purchase cooking gas when it depletes at a time when “mwezi iko corner.”

Generally, any interference with your monthly budget due to an emergency would make you struggle with your bills. The overall economic consequences might leave you reeling in a heavy and unending financial burden.

Read Also: 10 Steps to Reach Financial Stability

3. It Could Take You Much Longer to Recover Financially from an Emergency 

Some emergencies can be massive, such that you find it challenging to bounce back to proper financial health without an emergency fund.

If you take out large amounts of debt to pay for that complex medical treatment, rent, or mortgage, you are sure to suffer a financial setback. And it might take years to pay off these debts and live a debt-free life. On the other hand, an appropriate emergency fund can bear some of the concerns, making your financial load considerably less.

Read Also: How to Mentally Recover After a Financial Setback

4. It Will Be Much Harder to Take Advantage of Money-Making Opportunities

The majority of your financial, physical, and mental resources will be directed into resolving the unforeseen circumstance, which is a significant consequence of not having an emergency fund. The issue is that you may need to liquidate an asset or take out a loan. And the implication is that even if you had a good investment opportunity, it would pass you by till you are financially solid again.

A money-making opportunity can also be in the form of a new job, and you may be required to relocate or commute. In any case, your demand for immediate funds may be difficult since you lack liquidity. The absence of a safety net leaves you in the most vulnerable and complex situations, making financial investments and stability difficult.

5. Your Financial Goals Take a Back Seat

A financially demanding emergency might derail your financial goals if you do not have a safety net in place. You may find it difficult to repay your debts and meet your expenses and necessities if you do not have this fund. If you were building an investment fund, the process would now take significantly longer. You may even be forced to withdraw from it.

If you are on the brink of acquiring an asset, such as a commercial vehicle or land, you might probably put it on hold since the goal posts shift and priorities change. You could easily avoid this predicament if you had a sufficient emergency fund to cover the period of uncertainty.

Read Also: 10 Things to Do Mid-Year to Achieve Your Goal

6. You Will Have to Deal with Additional Stress in an Already Bad Situation 

Emergencies are naturally stressful, and other financial demands can escalate the situation. 

Whether it's a job loss, car trouble, or a landlord problem, your main focus should be to attend to the issue at hand. The last thing you would wish for is to be in a dilemma between how to pay for the service and still be able to pay your child's school fees.

Suppose you have a safety net in place. You will not have to hustle to achieve these financial demands. Instead, you'd sit pretty, calmly, and plan your next stage of life.


Even if you live on a budget, make an emergency fund a priority for that rainy day. It is necessary for any eventualities, helping to soften the blow. The fund will quickly foot the bills you never saw coming.

You do not have to begin with a large fund. Start small and progressively build it up, depending on your financial circumstances. Even if you reach your primary goal, the general convention is to make this account unreachable. Only withdraw money in an emergency and replace it as soon as possible.

Ian Job is an articulate writer with over four years of experience in SEO writing, digital marketing and screenwriting. Away from writing, he's probably producing an indie movie if you don't find him mentoring upcoming content writers. You can connect with him on Medium.

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