An emergency situation can easily upend your life if you aren’t prepared. To prevent dramatic and lasting effects on your future, you need to do some planning and saving to help you get through a financial disaster. Here are 4 suggestions.
Building an emergency fund will create a buffer for you if something unexpected happens. You should try and save at least three to six months of expenses. The more dollars you can put in the fund, the more breathing room you’ll have if an emergency occurs, like a job loss or serious illness. If you have a family, consider building an emergency fund that can cover a year to provide a good cushion for your family.
Reviewing your budget each month to make sure it’s in good shape is a great habit to get into every month. It will also help you prioritize and adjust items more easily to cover any unexpected costs. You should consider creating a backup budget as well, that streamlines your expenses in an emergency situation. Look over your current budget and figure out what you can cut if necessary. Planning an emergency budget now will make it much easier to deal with a crisis if it comes.
The value of your life policy benefit should provide enough money for your beneficiary to cover your funeral costs, pay off any debts you have, and cover the cost of living for your dependents after you’re gone. You may also consider the cost of your kids’ education as well. For more on how to calculate the coverage you need, check out Tips for Estimating Life Insurance Coverage.
If you fall seriously ill, medical bills can quickly add up. If you’re injured and can’t work, you’ll be saddled with medical bills AND you won’t be able to make money. So, it’s a good idea to have health insurance coverage to soften the blow. Make sure to research the best options for health, life, auto, homeowners or renter’s insurance to protect your finances. Depending on where you live, you may also need to plan for natural disasters like hurricanes, floods, forest fires, tornadoes and earthquakes. Talk to your insurance provider about getting disaster coverage if you’re in a high-risk area.