As much as you try to plan ahead for the unexpected, there may come a time when life throws you a curveball. (That point has been proven recently with the current coronavirus pandemic.)
When emergencies arise, they shake up your everyday routine. They also may shake up your bank account. Yet, as stressful as the situation may get, having a financial plan and an emergency fund can help take the pressure off.
Here are 4 common emergencies to consider, and the best ways to handle them financially.
1. Losing your job
Whether you’ve been fired or laid off, a job loss is one of the most crushing situations to find yourself in. But you’re not alone. According to research conducted by The New School for Social Research, a whopping 96% of Americans experience more than four significant periods of lost income during their working years – usually as a result of a job change or job loss. With this in mind, it’s important to remind yourself that you can pick up the pieces and find your next job, even if it takes a while.
That said, it’s natural to be bummed out over a job loss. So, take the time you need to process everything before you jump right back into the job hunt. In the meantime, find out if you’re eligible for unemployment and start the process to file weekly claims.
You should also get in touch with all of your service providers for any bills you have, including student loans, credit cards, and utilities. Most companies have payment assistance options for financial hardships and will work with you if you can’t afford your current payments.
Final pro tip: This is a good time to go through your budget and eliminate any non-essential items, like multiple streaming subscriptions or gym memberships. This will help you free up cash until you get back on your feet.
2. Medical emergency
Whether you’re injured or ill, facing a medical emergency can be stressful. This may also mean you’re out of work for a while.
First things first: Talk with your employer to find out how much sick leave you have, and whether it’s paid or unpaid. Also, find out what your insurance covers along with any copayments or deductibles you’re responsible for. This way you won’t be dealing with surprise medical bills.
You may also want to talk to your doctor about generic-brand prescription options if you use expensive name-brand meds. Lastly, if you’ll be out of work, find out if you’re eligible for disability compensation to supplement your income.
3. Car troubles
This is a biggie and it’s likely happened to you. You get ready for the day, grab your keys, and prepare to hit the road – only to find you have a flat tire or dead car battery. Just like that, all your hopes for an easy and productive day go out the window.
While this is frustrating, your best bet is to stay calm and have a plan of action.
A good first step is to contact an emergency roadside assistance provider. This way you can get your tire changed on the spot or get your car towed to the nearest repair shop. Then, contact your insurance provider. Depending on what’s included in your roadside assistance program or insurance policy, you may even get a rental car while your automobile is in the shop.
As with a lot of emergency expenses, car repairs can get pricey. If you find yourself with a huge bill, don’t panic. Be sure to ask a lot of questions and find out what has to get fixed, versus what’s optional. Some repair shops will give you a laundry list of suggested maintenance, even if the repairs are not urgent.
Once you have the final price, find out if there are any payment arrangements available. Also, consider other means of transportation – including public transit or carpooling with friends – if you need more time to save up money for the repairs.
4. Home repairs
Like car troubles, an unexpected home repair is another headache that can cost you big bucks. Still, ignoring that broken water heater or leaky ceiling won’t make it go away, so it’s best to take action sooner than later.
First off, decide if the repair is something a professional should handle or if you can fix it yourself. For repairs that require a higher level of expertise, it’s a good idea to enlist the help of a pro. If your savings aren’t enough to cover the costs, consider taking out a low-interest personal loan or a zero or low interest credit card. However, this should be a last resort.
Emergency savings are essential
As much as we hate to think about the unexpected events, it’s better to plan for them ahead of time.
With that, here’s our final pro tip: It’s always a good idea to set aside funds for an emergency. This way you’ll be financially prepared if life throws you a curveball.