Despite our best wishes, the unforeseen can happen and, unfortunately, they tend to impact your finances just as much as anything else. From home emergencies to accidents on the road, it’s important to know what protections you can put in place to safeguard your finances. Here, we’re going to look at a few examples, their benefits, and why it’s important to invest in more than one alone.
Insurance Is Critical
As your frontline defense in most emergencies, your insurance policies, such as health, auto, renters, disability, and life insurance, all serve specific functions. But even the best policy won’t cover everything. You can still be left out of pocket due to deductibles, coverage limits, and exclusions. It’s important to choose policies that cover your needs as best as possible, understanding the risks likely to affect your property so that emergencies don’t fall outside of your coverage.
Emergency Funds Can Be A Lifeline
When it comes to the immediate financial impact of a big unexpected expense, your insurance should cover the majority of it. However, for anything that isn’t covered and for any long-term expenses, like job loss, an emergency fund can ensure that you’re protected as well. Emergency funds provide immediate liquidity to pay bills, cover deductibles, or keep your household running. Ideally, set aside 3–6 months of expenses, and keep the money easily accessible, such as in a high-yield savings account. Be sure that these savings are kept separate from your regular savings so that they’re not depleted by short-term costs.
Get Protection From Legal Support
There are emergencies where you’re not at fault, but someone else might be liable. That means that someone else should pay, as well. If you’re injured in a car crash or on the job, having access to personal injury trial lawyers can drastically change your financial outcome. Legal professionals can help you recover damages for lost income, medical expenses, or emotional distress that you might otherwise have to cover yourself. As such, it’s important to keep the number of an attorney with you, preferably in your wallet, purse, or even in an emergency contacts and medical information card in your car.
Have An Emergency Budget At The Ready
No matter the situation, having a budget you can put in place can ensure that you’re protecting as much of your money as possible. Separate from your regular household budget, an emergency budget should outline precisely how you can reduce your extra expenses as much as possible, and should include instructions on things like cutting off any subscription services that you don’t need. Creating it in advance allows you to act with clarity, not fear.
Relying on a single financial safeguard, like an emergency fund, is risky. Emergencies rarely affect just one aspect of your life. For instance, your emergency fund might cover you in the event you have to take time off work due to an accident, but will it help you cover your skyrocketing medical bills? Find the combination that works best for your needs.
