4 Common Financial Emergencies And How To Prepare For Them
Most everyone has been there at one point in their lives. Life throws you a curveball, and you end up with financial challenges that you were not expecting. Here are four of the most common financial emergencies that people experience as well as ways to guard yourself against the negative repercussions:
MEDICAL EMERGENCIES OR ACCIDENTS:
As one of the most common causes of bankruptcies, sudden medical expenses can derail even the best-laid budgeting plans. Part of the problem with medical expenses is that most insurance plans are built around outdated numbers and statistics. For instance, in 1967 an injury claim was set at a minimum of $15,000 per person, but what is required today is now around $107,000. Many insurance coverages are still based on that old number, and not on the modern equivalent. When you’re looking at different insurance options, you’ll want to consider the huge financial burden that emergencies can be. A flexible spending account can help to alleviate the costly expenses associated with medical care.
JOB LOSS:
Even the most secure jobs are at risk of being threatened in a serious economic downturn. To guard yourself against a job loss wreaking havoc on your financial future, experts recommend that you always have a good idea of your necessary living expenses. Keep in mind how you might be able to cut expenses quickly. Ensuring that you have available credit will also help to alleviate stress in an emergency. It is also a good idea to continually keep your resume updated and ready to go should you find yourself looking for a new job unexpectedly.
POOR INVESTMENT RETURNS:
Although there can be a huge financial upside to investing your money in the stock market, the possibilities of big losses are also something that you need to consider. Guard yourself against adverse outcomes by diversifying your portfolio and letting the investment experts make the decisions if this is not your area of strength.
NATURAL DISASTERS:
Nobody can predict when and where a natural disaster may strike. To protect your family and your home against Mother Nature’s wrath, it is always a good idea to be prepared with more insurance than you think you could ever need. Be sure to consider both home and life insurance when devising an emergency preparedness plan. Make sure financial resources (savings and insurance) will be enough to recover any necessary restoration afterwards.
The single best way to prepare for any of these unexpected financial challenges is to have a solid emergency fund in your reserve. A sufficient amount of available extra cash will give you the peace of mind that you can handle any of life’s little emergencies with ease. Although you cannot possibly prepare for every sort of disaster, a financial cushion can certainly help to soften the blow.
For more information on how you can become confident in your future, contact me now.
Sources:
The Balance | Planning for Financial Emergencies
MarketWatch | 5 ways to prepare for financial emergencies
Life Credit Personal Loans | How Much Should I have in an Emergency Fund?
Callaway & Wolf | Auto Accident Minimum Liability Coverage
