It isn’t uncommon for people to carefully manage their finances and pay off debts. Many focus on saving money to build a fund for their kids’ education and plan their retirement.
But what about the financial emergencies that you haven’t considered? Are you prepared to handle those unexpected expenses?
4 Financial Emergencies You Need To Be Prepared For
1. Health And Medical Emergency
Many people don’t prioritize a health insurance plan because they feel healthy, fit and have normal test results. However, medical emergency and accidents happen quite unexpectedly.
If you are not prepared, they will prove to be a massive financial burden. The medical bills add up quickly and if you are not financially prepared to handle it, you would be in a world of pain.
Health insurance will help you cover pre-hospitalization and post-hospitalization expenses. Ensure you have an adequate amount to take care of expected and unexpected medical bills.
If you still fall short of money to pay the medical bills, taking a personal loan for medical emergency may bail you out.
Look into Health Share Programs like Annual Open Enrollment where members help each other by sharing in the cost associated with eligible medical expenses.
2. The Loss Of Your Job
There are several reasons why one may lose their job – an economic downturn, downsizing of the company or any unexpected reason.
Job loss can lead to serious financial problems since you won’t have a steady stream of income. You still have to pay the rent, kids’ tuition, buy groceries and pay other bills.
Even if you get a severance package, you will have to rely on your savings once that resource drains out.
Many financial experts recommend you save a reserve of at least one month’s income in the event of a job loss.
You can prepare by having a fixed or recurring deposit or liquid mutual funds. They are liquid, low risk and give you a moderate return to cover for the emergency.
3. Natural Calamities
There is no way to know when a natural calamity will strike. Hurricanes, earthquakes, floods, snowstorms and landslides can cause severe damage to life and property.
To protect yourself from natural calamities, you must have a life insurance and home insurance policy. Ensure that you take sufficient amount of cover for both policies. This will help you cover medical emergencies as well as property repair costs if a natural disaster strikes.
4. Car Or Vehicle Troubles
Owning a car makes your life a lot easier as you can drive yourself anywhere, anytime. But what happens when the car breaks down and you are handed a hefty bill?
The best way to be prepared for potential car troubles is by having a maintenance fund. Invest in car maintenance such as cleaning filters, rotating tires or changing oil regularly. This ensures that the car doesn’t break down often and keeps the repair costs low.
Assess your past spending on the car and set aside a little money each month as a car emergency fund.
Key Takeaway On Financial Preparation
It would be wise to set aside some money every month to build your emergency fund. This will help you prepare against financial emergencies of different kinds, at any stage of life. So start growing that financial cushion today and prepare for potential problems.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India's first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life's mission to help and educate people on various financial topics, so email him your questions at shiv@moneytap.com.
I hope you enjoyed this blog post about how to ensure that you are prepared for the major potential financial emergencies.
Interested in more articles about preparing your finances?
Read Related Resources:
• Why You Should Get Catastrophic Health Insurance Coverage
• How To Find The Best Title Loan Program
2. The Loss Of Your Job
There are several reasons why one may lose their job – an economic downturn, downsizing of the company or any unexpected reason.
Job loss can lead to serious financial problems since you won’t have a steady stream of income. You still have to pay the rent, kids’ tuition, buy groceries and pay other bills.
Even if you get a severance package, you will have to rely on your savings once that resource drains out.
Many financial experts recommend you save a reserve of at least one month’s income in the event of a job loss.
You can prepare by having a fixed or recurring deposit or liquid mutual funds. They are liquid, low risk and give you a moderate return to cover for the emergency.
3. Natural Calamities
There is no way to know when a natural calamity will strike. Hurricanes, earthquakes, floods, snowstorms and landslides can cause severe damage to life and property.
To protect yourself from natural calamities, you must have a life insurance and home insurance policy. Ensure that you take sufficient amount of cover for both policies. This will help you cover medical emergencies as well as property repair costs if a natural disaster strikes.
4. Car Or Vehicle Troubles
Owning a car makes your life a lot easier as you can drive yourself anywhere, anytime. But what happens when the car breaks down and you are handed a hefty bill?
The best way to be prepared for potential car troubles is by having a maintenance fund. Invest in car maintenance such as cleaning filters, rotating tires or changing oil regularly. This ensures that the car doesn’t break down often and keeps the repair costs low.
Assess your past spending on the car and set aside a little money each month as a car emergency fund.
Key Takeaway On Financial Preparation
It would be wise to set aside some money every month to build your emergency fund. This will help you prepare against financial emergencies of different kinds, at any stage of life. So start growing that financial cushion today and prepare for potential problems.
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India's first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life's mission to help and educate people on various financial topics, so email him your questions at shiv@moneytap.com.
I hope you enjoyed this blog post about how to ensure that you are prepared for the major potential financial emergencies.
Interested in more articles about preparing your finances?
Read Related Resources:
• Why You Should Get Catastrophic Health Insurance Coverage
• How To Find The Best Title Loan Program
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