It's important to be prepared for the unforeseen. Financial emergencies can strike at any moment and it's wise not only to prepare a disaster kit but also to have an emergency financial plan in place as well! You never know what could happen next - that's why in this contributed post, these 5 unexpected expenses are essential on your list today:
Personal Accident
In the United States, there are an average of 35 million visits to the ER every year which accounts for about 15% (or more) on total healthcare spending. Injuries from accidents can be costly both financially and physically – one visit alone may cost anywhere between $150-$3k! That's why personal accident policies are a good way to take care of the financial effects caused by accidents. They can pay for things like your hospital bills, home modifications, and even daily living expenses.
Car Accident
Car accidents are one of the most common types of emergencies that people face. If you have car insurance, your policy will likely cover at least some portion of any damages to your vehicle resulting from an accident. However, if another driver is not insured or does not have enough coverage for whatever reason, there may be additional expenses related to damage repair and medical bills. For uninsured drivers, in particular, having a good hospitalization plan with higher limits than those offered by many standard plans can help protect against financial disaster after serious injuries during an accident involving their vehicle. You could also consider increasing deductibles on collision and comprehensive coverage. Just be sure to do the math and find out if you'll likely come out ahead by doing so before canceling your current policy. An important aspect of handling a road accident is having a quality lawyer's contact information, as they can significantly impact your liability and claim in the event of an accident. If you had a motorcycle accident and you're in the Tampa area, you'll want an experienced motorcycle accident attorneys.
Natural Disasters
Natural disasters are unpredictable, but that doesn't mean you can't do anything to prepare. Even if your house isn't in an area at risk of flooding or wildfires, natural disasters like hurricanes and tornadoes affect most of the country. If you're in California, earthquake insurance is usually a separate policy. Ensuring that you have insurance that covers these events can help you get back on your feet. It's important to carefully consider the various ways in which a natural disaster can affect your financial situation and where you are exposed. Always try to determine what is included in your coverage and what is not. If you have a specific natural disaster in mind, research whether or not your insurance covers it.
Losing Employment
In the event you lose your job, it can often take a little while before returning to work. In this period, with no pay coming into the household, you would need money for day-to-day living expenses such as food and bills. Therefore, it's always critical to have a savings account.
For those of you with inconsistent income, it's best to have an emergency fund that can get you through six to 12 months' worth of expenses. In many cases, the financial loss from losing employment will be covered by unemployment benefits which can last up to 12 weeks depending on where you live. And please use your unemployment benefits. It's YOUR money. You've paid into it.
Losing Significant Investment
In the case of a significant loss, such as the market value of your investments dropping significantly, it can sometimes be difficult to recover from, especially if you need the money in a a short amount of time. In this situation, most people will sell off their investment at a lower price than what they paid for, which of course, means you lose money overall.
In order to prepare yourself for this financial emergency, it's important NOT to put all your eggs into one basket and to diversify assets across different types and amounts. Creating an asset allocation that is appropriate for each person's risk tolerance level allows investors to protect against major losses and allow them to take advantage of more opportunities when investing over time.
In conclusion, many other types of emergencies can end up costing you money. By saving ahead or buying some insurance, you'll be able to protect yourself against these unexpected financial shocks and avoid the stress that comes with them!