Whether you’ve just turned 18 or you’ve just turned 50, it is crucial to prepare yourself well for financial emergencies. In our world, it’s appropriate, and even necessary, to expect the unexpected. Here are just a few things you should prepare yourself for financially:
Market Crashes
Unexpected market events can result in economic downturns. One obvious example of this is the latest coronavirus pandemic (COVID-19). These unexpected events can cause a number of financial emergencies for you personally, including employment loss, physical or mental health challenges, and business failures. It is difficult to predict when the market will crash, so it’s essential to have an emergency fund set aside so you can protect yourself through these difficult times.
Unexpected Medical Events
Unexpected medical events and injuries can prevent you from working. These events can happen to anyone, in any number of ways, and at any time. They can be physical or mental in nature. In the case of one of these unexpected medical events, Social Security Disability and/or private disability insurance can help protect you. Social Security Disability will typically replace your regular income and is based on your lifetime earnings. In the event of your own death, life insurance can ensure your family’s financial well-being. It’s important to anticipate the ways in which you or your family need financial protection.
Personal or Family Crises
In addition to market crashes and unexpected medical events, it is probable that everyone will experience a personal crisis at some point in their life which negatively affects their finances. Divorce, death, unemployment, and bankruptcy are just a few possible crises which could affect you at some point. Some of these crises could even happen at the same time and make for some incredibly tragic situations.
In the event of these unfortunate circumstances, a financial emergency fund could literally save your life. You can easily start an emergency fund by setting aside some of your surplus income each month into a separate account. Using a separate account will help ensure that you have the money you need in an emergency.
Preparing yourself for financial emergencies doesn’t have to be difficult or time-consuming. There are many simple, easy ways to begin protecting your future. If you’re unsure of where to begin, there are many professional financial planners available who can help you make a plan. If you take a few minutes to plan a financial fallback for yourself, you can ensure your own protection as well as your peace of mind.
If you need more help figuring out your finances, meet with Mike for a financial planning session!
