Five Expenses You Should Always Be Prepared For Financially

Wednesday, January 29, 2014, 1:00 AM | Leave Comment

Keeping afloat financially is important for every individual or family. While it might seem like a good idea to save every penny under a mattress, there are actually important expenses that should not be ignored.

Here are five experiences that you should prepare for financially.

Five Expenses You Should Always Be Prepared For Financially

  1. Fire or Water Damage

    A fire or a flood can cause extensive damage to a home, and this expense can be difficult to cover for many people.

    While homeowner’s or renter’s insurance might be seen as an unnecessary expense, those who experience a fire or theft will appreciate the coverage should these events happen.

    These insurance products do not cover floods, and those who own a home in a flood zone will want to purchase a separate policy to cover the expenses.

  2. Pest Damage

    Pests like termites can wreak havoc on a home nearly as much as a fire or flood. These annoying little critters like to eat wood from walls and foundations.

    Therefore, termite control is a necessity. Other pests can cause damage to a home and hurt its value.

    If living in Los Angeles, spending a few bucks annually for an inspection for pest control in Los Angeles or other big cities can actually save money in the long run.

    Spending money on treatment is a must if a home is infested.

  3. Health Care

    Some form of health insurance is important. This necessity becomes more important for those with families.

    The new Affordable Health Care Act requires most people to purchase insurance.

    While this expense might be a bit of a hardship, it will not be as expensive as a heart attack or a diagnosis of cancer.

  4. Unemployment

    Financial experts recommend having an emergency fund built up over time.

    The minimum that personal finance coaches recommend is about $500 to $1,000.

    This will not make up for a lost job in the long run. A good goal is having between three and six months of expenses available in case of a layoff. This emergency fund can help cut the need for accessing debt in tough times.

  5. Retirement

    Unless they die beforehand, most people will retire at some point. They will either do so willingly, or they will be forced to do so by downsizing or ill health. Defined benefit plans are no longer common.

    Therefore, today’s workers need to be prepared for their retirement expenses by making regular, substantial contributions to a retirement account like a Roth IRA or a company’s 401k plan.

Those who are unprepared for these common expenses can find themselves in dire straits and even bankruptcy.

Taking these few steps to be prepared can help avoid a catastrophe and ensure financial stability in the long run. Preparation for normal and unexpected expenses is a must.

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