You may be saving for a new car, or a future home for your family. But are your savings also ready to handle a sudden, big expense?
If we do not take steps to secure our finances, we may not only find ourselves deeper in debt, and with lower credit scores to boot, but we may also jeopardize our financial progress overall.
Consider if you feel financially prepared to face these five common, yet often unexpected situations:
- Changes in Health: Whether you slipped and fell, or felt the scare of a heart attack, chances are, you now face medical bills. Even if you have health insurance, many plans have deductibles, or amounts you have to pay out of pocket before your health expenses are covered, that may be hundreds or thousands of dollars. Push yourself to budget each month so that you can have an emergency fund to cover deductibles in case of a medical emergency. The peace of mind will be well worth it!
- Car Trouble: Even those of us who regularly maintain our cars have been frustrated by an engine that’s mysteriously gone kaput, often leaving us stranded in the middle of nowhere. Many of us rely on our cars to get to work, pick up groceries, and take our kids to school. Towing and car repairs can cost more than we anticipate. Prepare yourself for this cost by contributing monthly to an emergency fund.
- Inflation: Inflation diminishes our spending power a little each year, and interest rates rise and fall. This can lead to a moment down the road where we feel a sting at the cost of borrowing money, or don’t quite have the savings and stability we hoped. When setting savings goals, challenge yourself to save a little more than you think you need in order to counter inflation.
- Home Repair: Electrical wiring goes bad, pipes burst, and roofs start leaking; you never know what sudden but very urgent house repair you’ll need to tackle next. Keep a savings fund for expenses just like these to avoid falling into debt, or having to live with an issue for longer than you would like.
- Job Loss: No one likes to imagine a sudden halt in their income, but we owe it to our financial stability to protect ourselves in the event this happens. Give yourself the security you deserve by setting a goal to have an emergency fund large enough to cover at least three months, if not more, of unemployment. This can give you the time you need to find your next job, without putting yourself into crippling debt.
The time and discipline it requires to build these security measures are well worth the effort. You’ll more likely avoid the headaches associated with encountering a situation you’re not financially prepared for. To learn about more ways to improve your financial life, visit the Syncis blog at https://www.syncis.com/blog/.