5 Financial Emergencies You Should Plan For Right Away
The past few months have been tough on everyone, and it’s most likely to remain that way in the coming days as well. The global health crisis caused by the COVID-19 epidemic has resulted in a lot of stress and anxiety among people, not only about their physical and mental health but also their unpreparedness in the face of a financial emergencies. Add to that, with scary headlines announcing a severe economic depression in the coming months, and it is quite natural to worry about your financial security.
This means that with social distancing becoming the new normal and business getting affected, job cuts and salary reductions have started to impact almost everyone. While we cannot control the economy or the stock market, managing our finances is in our hands, and that is one of the biggest takeaways that you can learn from the epidemic. So, looking ahead, it is better to make the right money decisions today so that we are better equipped to face the financial insecurities of tomorrow. Read on to find out five case scenarios that you should plan for, especially if you want to strengthen your financial independence and security.
A lay-off or even a furlough for that matter can hit your stability hard. This is why it is essential always to have an emergency fund worth your six months of income stashed away to deal with job loss.
This is a bitter reality sprung upon a lot of people in this dire time. We can always learn from disasters like this – be prepared for the future, especially if you don’t have job security.
Unforeseen Medical Expenses
The smart thing to do in today’s world is to have medical insurance. If you don’t already have one in place, do your research and get one right away.
However, having savings for unforeseen medical expenses is always a good idea. There can be several illnesses and accidents which your medical insurance might cover. This is where your savings come in and save you, literally!
We have come to rely heavily on our credit cards for this unexpected expense. Whether it is the death of a family friend/relative in another country or critical events like weddings, the birth of a child, all these events can incur last minute travel costs, which will leave a massive dent in your balance. Thus, it is always a good idea to keep aside money for unexpected travel.
Earthquakes, flash floods, avalanches, tsunami, and other natural calamities can strike anywhere. It not only leads to mental stress but also loss of life and property. To ensure you are protected from distress, have life insurance for yourself and your family in place along with home insurance for your home.
Go for a plan that has a massive cover to give you that extra cushion you need in case a natural calamity does strike and wrecks your possessions.
Car and Household Expenses
Having car insurance in place is a prerequisite when buying a car. While the insurance will cover most of your expenses, there are still minor inconveniences that your insurance might not cover, and for this, there is your emergency fund. The same goes for all the household equipment. While you can ensure the major ones, the smaller ones will still need repair from time to time, or your wall might need repainting. For all this, there is your contingency fund.
Emergencies are unplanned and teach us one important to remember – nothing is in our control. The least we can do as humans is to prepare ourselves best for any unforeseen event we might have to face. The best way to tackle the above emergencies is by building a contingency fund. Earlier contingency fund was used for emergencies like the ones mentioned above. Still, the global health crisis like COVID – 19 has proved that a contingency fund is something that you need to start planning for right in the beginning.
This is because such pandemics are unforeseen and can now impact the world in a much bigger way than before. In such a scenario, a contingency fund can help you tackle the issues related to the crisis in a much better and informed manner. After all, having financial security ensures that you have a little extra peace of mind when the going gets tough. Start your contingency fund today – learn more here.