Source: https://var/www.thepennyhoarder.com/budgeting/prepare-for-a-financial-emergency/?aff_sub2=homepage
We never really know what to expect when living our lives. Sometimes we lose jobs, sometimes someone in the family falls ill, or even just simply expenses are too high for one month. Regardless of the reason, there are steps to take to prepare for any sort of financial emergency. There is a way to prevent yourself from losing everything when unexpected circumstances occur. Thankfully, The Penny Hoarder helps us break down different ways to prepare for any kind of financial emergency.
1. Create an Emergency Fund
The Penny Hoarder quotes Ariel Ward saying, “A proactive move everyone should make to protect themselves from income loss, is [to] start an emergency fund with a goal of having six months of living expenses set aside.”
Many of us have savings accounts, but it’s important to designate this account for emergencies only. Do your best to set aside some of your monthly income to store in this savings every month. Gradually, you will have a solid cushion in the case of a financial crisis. This is also a great option because unlike other ways of saving money, this way is easily accessible at any time when you need it.
2 .Live Below Your Means
It’s important to get in the habit of spending less. Just because you have a little extra in your check doesn’t mean you should splurge it on shopping. Make a conscious effort to pretend you make less than you actually do, and your habits will follow suit. This will pay off when something unexpected does happen, as you’ll already be prepared with extra cushion due to the habits put in place.
3. Get Covered By Insurance
Ariel Ward also says, “Everyone should have a disability insurance for income replacement, and couples who are dependent on one another’s income should have a term life insurance policy with each other name as the insured.”
Disability insurance is important because it covers you if for some reason you’re unable to work and earn your income. In most cases, it won’t cover all of the income; however, it will help to an average of about 60% of employee earnings.
Not only is disability insurance important, but it’s also important to have a solid health insurance to cover you and your family. Medical bills can be extreme, and that can easily affect your savings in an instant. Having a strong medical insurance can prevent that so you can save your money for a different kind of unexpected event.
4. Share Financial Info With Necessary People
Sharing your financial information with a trusted individual is always beneficial should any unfortunate circumstances occur where you can’t communicate it yourself. Often times, a spouse or partner is in the loop; however, that’s not always the case. Occasionally only one individual manages the finances, and if something ever happens to them, the other is left vulnerable and unaware of the details.
If you’re single or not ready to share with a partner, find a trusted individual that can have access to your important financial information in case you’re not able to manage it for any reason. As The Penny Hoarder says, “That way if you’re in the hospital for a couple weeks, you don’t have to come home to an eviction notice on your door.”
5. The Infinite Banking Concept
The Infinite Banking Concept is a banking method that not many people learn about, but it’s a powerful and modern way to take full control of your financial future by creating your OWN banking system. Here at Up Planning Edge, we help people everyday open their eyes to how simple it really is to save and multiply their wealth. Interested in learning more? Check out our free resources and contact us at https://upplanningedge.com/.