These days, it’s definitely a must to have an emergency fund stashed somewhere in case things go wrong. And if there’s one thing we learned in life, it’s that things can always go wrong – and you need to have some savings to soften the blow when that happens.
In today’s article, we’ll list down the top 4 financial disasters you need to prepare for, preferably with a large and comfortable safety net in the form of savings or insurance.
1. Unexpected Repairs
The most common financial disaster that many people experience is unexpected repairs. That could be anything from broken refrigerators to car breakdowns. Cars are too important to be left unrepaired since people use them for their daily commutes, so it’s no surprise that many would rather get into debt than risk not having their car.
To avoid this, try to have a separate savings account specifically for your car. You can even go the extra mile by taking out a comprehensive car insurance that also protects against unexpected repairs.
2. Loss of income
Losing a job is always hard on anyone, especially if that someone has no savings in the bank whatsoever. That’s why it’s always good practice to keep at least 3-6 months’ worth of your expenses saved in an emergency fund.
Having an emergency fund allows you to still be able to live normally and stay debt-free while you’re still looking for a new job. Once you’re finally employed again, your first goal should be to replace your emergency fund so that you can tap into it if the need arises.
3. Illness or Death
One major event that could spell out financial disaster for many people is illness or death in the family. After all, even just one instance of this can lead the entire family to crippling medical debt. In America, over 50% of families have medical debt costing more than $10,000.
If you’re the main provider of the family and you’ve got dependents, it’s very important that you keep some money in your savings for emergency purposs. It’s also a good idea to get medical and life insurance so that they’ll have a way to manage their financial obligations in case you unexpectedly get sick or worse, die.
Sometimes, things happen that are simply out of our control. When accidents occur, it’s good to have some savings that you can dip into so that you can shoulder the costs immediately. Even better, you should opt for insurance plans that covers accidents and
For instance, if you’re unprepared, a single car accident could easily lead your family to financial ruin. Without any savings or insurance, not only will you have to pay for all the necessary repairs, you also have to pay for the hospital bills yourself.