Although disaster can hit your bank account on a moment’s notice, there are some emergencies you can prepare for.
Big or small, financial crises will strain paying your bills and saving for retirement. And while you should have between six months to a year’s income saved up in an emergency fund, the repercussions from the following four financial disasters can be minimized if you take a few precautionary measures.
Natural Disasters. With a slew of tragic natural disasters in recent memory, such as Hurricane Harvey and Hurricane Maria in Puerto Rico, we now know more than ever, that we need to plan for the unexpected. Insurance is a must for all of your most valuable assets, such as your house and car. Consider flood or earthquake insurance if your region is prone to these kinds of dangers. With recent natural disasters, you just don’t know what will happen. And although insurance can be expensive, you’ll save in the long run if you need to pay out of pocket for expensive fixes to problems like flooding. The chance is worth the monthly payments.
Stock Market Losses. Stocks can tank but having a diverse portfolio ensures that if one security drops, others will stay safe. Don’t invest in a one type of industry. Spread your investments around.
Loan Default. If you are reading this, chances are high that you currently have some form of debt, whether it be from credit cards or student loans, or both. But to prevent default, make sure you’re limiting your charges. Live within your means and use a budget to figure out a month-by-month plan of payments that works for you.
High Gas Prices. If you own a car, you know that gas prices have recently increased. You may think this pales in comparison to the other financial disasters but with rising gas prices, and daily commutes to work, gas costs add up. If you live in an area where public transportation is easily accessible, try it out for a week instead of driving to work. If you find that you saved a few dollars that week, it will be worth your efforts to stick to public transportation. Also, choosing a car that is electric or hybrid could save you hundreds of dollars per year.