Life can throw up all sorts of surprises. One minute, everything in your life is going smoothly. Then, something can happen out of the blue that changes everything. It’s important to be financially prepared for these unexpected life events. And to prepare, you need an emergency fund. Here are the unexpected events that you should prepare for.
Your health can play a big part in your ability to earn an income. For this reason, it’s important to have medical insurance. However, even with insurance, you may still need money to cover medical costs. This could be because you didn’t realize the extent of the problem before signing up for insurance or because you have co-insurance to pay. It’s also possible for medical costs to rise beyond your coverage level, which means that you have to cover the cost of treatment out of pocket.
There are times when we lose our jobs through no fault of our own. It could happen because your company is downsizing or closing down altogether, or it could be as a result of some serious misconduct on your part. In some cases, you might not even know that you’re about to lose your job until the day comes and you don’t turn up for work. In all cases, it’s a good idea to have a money cushion with which you can pay bills and other household expenses until you find a new job.
Divorce & Child Support
Divorce can be very expensive, especially if you have children to support. You may need money to cover the costs of legal representation and child support payments until you receive your share of any settlement. If you don’t have enough money saved up for this, it means that you could end up taking out a loan or second mortgage on your existing home.
Minor car trouble can turn into major repairs in a very short space of time, especially if you don’t have the funds to get it repaired quickly. This is why it’s important to save up for unexpected car expenses. Even if your car insurance covers minor problems, this doesn’t mean that you won’t have to pay for certain parts. It also doesn’t cover maintenance, such as oil changes and tire rotation, which you’ll need if you want your car to last. You may need to look at car repair loans if you don’t have enough in your emergency fund.
Death of a Spouse or Parent
Death is always a difficult time, and it’s something that we don’t like to think about. However, if you were left responsible for someone else’s funeral expenses, then the last thing that you should have to deal with is trying to figure out how to pay for their funeral costs. If no one claims the body, then you could be responsible for having it buried in a public grave or cremated.
Household Repairs & Renovations
Your home will require periodic maintenance and repairs. It’s important to budget for these costs, too. However, it’s even more important to have an emergency fund that you can draw from in the event of a major problem with your home. A good example is if a pipe bursts or a roof starts leaking, then you could be looking at a large sum of money to fix the problem.