Did you know that 63 percent of Americans don’t have enough money put aside to cover a $500 emergency? In a survey by Bankrate, results showed that a significant number of households in the US don’t have the means to pay for life’s emergencies.
How about your situation? Our ability to weather life’s financial shocks and bounce back quickly is dependent on how prepared we are for these emergencies. Depending on one’s credit card for unexpected expenses can put you in a bad cycle of credit card debt and dependency.
Want to find out what key life events you should be preparing for? Read on.
- Car-related woes.
The most common type of financial emergency as reported by Pew Charitable Trust’sanalysis? Car-related repairs. Car emergencies range from brakes on the blink to more serious car accident injury circumstances.
While it’s easy to think that car accidents won’t happen to us, don’t let optimism bias leave you unprepared. Globally, as reported by the Association for Safe International Road Travel, close to 1.3 million die in road accidents per year. Amounting to, on average, 3,287 deaths daily.
A couple steps can take you from being unprepared to having a plan that will save you grief if and when it happens. What to start on? Have emergency contact numbers in your car, and at least $500 to $1000 tucked away in an emergency fund.
- Natural disasters.
Heard of the “It can’t happen here” syndrome? Ask yourself how likely it would be to find yourself in a record-breaking natural disaster. If you feel the chances are low you will find yourself affected, you have fallen prey to that syndrome.
Granted, if you are not anywhere near a fault line, chances are slim you will experience an earthquake. And if your area is not known for hurricanes, you can cross that off your list, too. But what is on the watch list for your area? Being aware and preparing for that eventuality doesn’t make you paranoid. It makes you smart. And if it does not go so far as to save your life, it will at least keep you comfortable until things return to normal. Here is a list developed by the US government that can help you be prepared.
- Death of a loved one or spouse.
The death of a loved one or a spouse can leave you reeling in more ways than one. Depending on the nature of your relationship, you could be left with their financial responsibilities. In the case of a spouse you have been dependent upon, and if no plans had been made for your support after he or she passes, you’ll want to think of a plan now. Even if you have been equal financial partners, not being able to split mortgage payments could put you in a financial hole. Funeral expenses and other costs can also cause the period after the death of a spouse to leave a person in a financially sensitive situation.
Neither death nor finances are easy topics to discuss for many. Mix these two topics, and most couples avoiding talking about it altogether. No one wants to imagine life after the death of a spouse. So if it’s hard to approach it from the angle of securing your future, instead approach it from the place of securing your partner’s financial future.
What tasks need to be done? What questions should be asked?Decide on funeral plans together. Make sure your spouse knows how to get into your accounts in the case of your death. If you don’t have a will, write one out. A lot of grief and instability could be avoided through the simple writing of a will.
They say the two unavoidable events in life are death and taxes. We take care of taxes yearly; it would be shortsighted of us not to plan for the other as well.