Friday, August 3, 2018

Worst-Case: 3 Ways to Bolster Your Finances Against Catastrophe

Many people will have at least one unfortunate experience that creates intense financial stress, and some people will experience several of these events over the years. These catastrophic events may create financial stress through expensive medical bills, property damage repairs, required unpaid time off of work and more. 

Keep in mind that many of these issues may yield a combination of unexpected expenses, and this can dramatically multiple the financial stress that you may be feeling. 

For example, when you have to take time off of work for an illness, you may be reeling from lost wages and medical expenses at the same time. Planning for these types of events now can help you to be prepared for what the future holds.

Bolster Your Emergency Savings Account Balance

Regardless of your current financial situation, you need to have a well-funded savings account. This is separate from your investment and retirement accounts. The funds are specifically earmarked for emergency situations. 

You may initially save up to three months of expenses in this account, and you may want to work on expanding the balance to a full year of expenses.

Live without Debt

Debt can cost you a small fortune on a monthly basis. This is through the principal reduction and interest charges. You may also have to pay annual fees, late fees and more. 

These are unnecessary and avoidable expenses that unfortunately weigh down your budget on a monthly basis. When you pay off debt, you eliminate these unnecessary expenses, and you have more money available to cover unexpected expenses through your regular income. 

You may also be able to save more money regularly so that your emergency savings account is funded.

Purchase Insurance and Warranties

Another important step to take to prepare for the unexpected is to purchase insurance and warranties. A home warranty from a company like America’s Preferred Home Warranty can cover most or all expenses related to breakdowns and deficiencies in the home. 

There are also multiple types of insurance coverage that you should consider purchasing for additional financial protection. These include home insurance, life insurance, auto insurance and more. Ensure that you have adequate coverage with an affordable deductible so that you can maximize the benefits of your insurance policies as needed.

You cannot always control the events in your life, and some unexpected events can create tremendous expenses with no advance notice. While you may not know when things will happen or what those things will be, you can follow these tips to financially prepare yourself for the unexpected.

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