Have You Planned Ahead for These Common Emergencies?
Many people are aware that financial emergencies can occur at the drop of a pin, and plan accordingly by saving a small sum to cover these potential disasters. Unfortunately, a greater number of individuals carry the “it won’t happen to me” mentality, which can put their financial security in jeopardy. Some aspects of financial prosperity involve eliminating, building a healthy savings account and living within your means. Another important component revolves around preparing for the unexpected to avoid being forced to drain accounts.
Save for unexpected repairs
An emergency savings account is a smart way to shield yourself from potential danger, and there are a number of expenses and scenarios you should consider when putting money aside. The first common emergency expense is home or auto repairs. A leaky roof, engine troubles or busted boiler can cost hundreds to thousands of dollars to fix. Many of these repairs must also be done immediately, either for safety reasons or to help you continue your day-to-day activities. For these reasons, it’s important to not only maintain your assets to lower the risk of an issue occurring, but also to save up a significant sum of money to avoid dipping into your savings, turn to credit or drain retirement accounts.
A job loss is perhaps the most worrisome and immediate scenario that you could face. A sudden loss of income can be devastating, and the last thing you want to do is use your hard-earned savings to cover mortgage payments, utilities, insurance and groceries. In many instances, families are forced to give up insurance, cash in retirement, run up credit card debt or fall behind on housing costs, all of which puts their financial security at serious risk. Obtaining a loan may also be more difficult if you are unemployed. An emergency savings fund that is large enough to cover at least three to six months worth of expenses may help mitigate the problem until another position is found.
Medical emergencies can carry a high price
Many Americans facing significant debt are making large payments as result of a medical emergency that caught them off-guard. No one likes to think of getting into a car accident or discovering a medical condition, but these situations can strike when least expected, and being financially prepared is essential. Simple medical procedures can cost into the hundreds and serious conditions may leave you with thousands in medical bills. While you may not be in a position to save tens of thousands for this possibility, saving some money may allow you to make upfront payments and negotiate with providers.