Home Editor's Choice How to Financially Prepare for Unexpected Life Events

How to Financially Prepare for Unexpected Life Events

How to Financially Prepare for Unexpected Life Events

“Expect the unexpected” is great advice until you actually try to apply it. There are so many what-ifs and so many eventualities that you really cannot prepare for everything. The good news, however, is that you can brace yourself. By having a financial buffer, contingency plans in case something were to happen to you, and also the right mindset you can weather pretty much any storm. 

Have Emergency Savings 

Emergency savings are your safety net. They are there for the worst-case scenario, and in most cases, you won’t want to dip into them too much. They are a buffer that does more for your peace of mind than they ever will when it comes to covering your bills. Your emergency savings should cover, at minimum, three months and ideally six months of living costs, though you will want to continue to add to it as time goes on. 

Know Where to Go For Extra Funds 

There are many instances where you may not want to use your emergency savings. If the cost goes beyond what you have in savings, then using your savings can hurt your stability and safety net. Similarly, if the cost is large but you don’t want to forgo that safety net, you will want to look for additional funds. Many use personal loans to help cover the cost of unexpected life events. Not only can you likely cover the cost entirely this way, but you will also be able to pay it off in increments. This works to help cover you financially without taking away your safety net. 

Items to Buy in Preparation 

A great way to save and reduce your costs overall is to buy necessities in advance and on sale. This is particularly useful if you know your area is at risk for certain activities. If it usually floods in your area, having sandbags already can help you reduce the risk and damage to your property. If your pipes have a terrible habit of freezing in your apartment building during the winter, then buying bottled water when it is on sale in advance can be a stress saver. 

When to Get Coverage 

Coverage is a great way to avoid cost but only when what you pay includes maintenance services. Many avoid getting their cars, appliances, and home maintained because of the cost of bringing someone in to do the job. If you are considering getting coverage, for example, coverage for your HVAC or boiler, then ensure that it includes additional services like yearly inspections and maintenance included in the price. This way, you can actually reduce the risk of costs in the future and keep yourself covered. 

Another coverage you should consider is life insurance. Getting life insurance, and having your affairs settled, can help prepare and better protect your loved ones in the worst-case scenario. 
Financially preparing for the unexpected often means having either coverage or the savings to cover those costs. Know where you will get the money, if not from your savings, and then you will be set.