Working in a creative field brings its unique challenges. There are many external forces at play that influence the construction cycle, ranging from the federal interest rate and the availability of capital to the unemployment rate. All of those factors lead to the following possibilities:
- You might be laid off, or you might not be paid.
- The firm you work for could go bankrupt.
- A recession could slow the construction cycle, causing a client to go bankrupt or a major project to be put on hold or canceled.
In addition to external forces, there are also some personal possibilities to consider:
- You or a loved one may get sick.
- You may need to travel suddenly or unexpectedly.
- You may need to leave a toxic work environment.
An emergency fund is the foundation of healthy financial habits. Having a dedicated emergency savings account gives you the freedom to deal with whatever life throws at you without the added emotional cost and without going into debt.
It may be tempting to argue that if something unexpected happens you can just put it on a credit card, but there’s an important consideration to make: interest rates.
Credit card interest rates can vary, but some may be as high as 15-30%. The interest rate can compound what was already a financial emergency into an even harder problem to deal with. If the emergency was emotionally challenging, having a monthly payment can be a regular reminder of something bad that happened to you.