It is important to be prepared to handle emergencies. You may have basic first aid training and know how to handle yourself in the event of a natural disaster or if someone gets hurt, but you may not be prepared to handle any financial emergencies that come up. Most emergencies affect your finances in some way. If you have an unexpected illness or need surgery you may be facing huge medical bills, especially if you do not have insurance. If you lose your job, you will have a difficult time making your payments, even if you do qualify for unemployment. There are things you can do to prepare your finances for emergency.
- Set up an emergency fund of about six months of expenses. If you are still working on getting out of debt you can have an emergency fund of about $1,000, which would cover most car repairs and deductibles you may have. You may consider saving one month's income as a mini-emergnecy fund, especially if you know that you may need it soon.
- The second things you need to do is make sure you have adequate insurance coverage. First you should always have health insurance. Medical bills add up quickly, and even with insurance medical care is expensive, but without it you may end up in a situation where you can't pay the money back. Then make sure you have enough coverage on your car and home with a deductible you can afford. Finally get enough life insurance to cover your family's needs.
- Don't dip into your emergency fund unless it really is an emergency.
Once these are in place, you should be able to handle nearly every emergency that comes your way. It will not take away all of the stress of the situation, but it can make it easier to cope with the other aspects of your situation.
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