How Much Should You Save in the Event of an Injury
Monday, July 13, 2020, 6:00 PM | Leave Comment
Everyone should have an emergency fund in case they end up in financial trouble.
A sudden injury could put someone out of work for weeks or months until they are able to return to the job or receive compensation pay in one form or another.
Here are suggestions for saving money to cover your expenses if you are ever injured.
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Budget
Many people set aside part of their earnings in the monthly budget toward an emergency fund. Ideally, you should try to save about four to six months of net income to cover living expenses in the event you were to be injured and unable to work or collect sick pay. Start by designating ten percent of your income for this purpose, and conserve the money for just this purpose. Add any bonuses, salary increases, or other new income to the fund to build it up over time.
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Savings
You may already have a savings account set up for short-term emergencies or long-term goals like college or a dream vacation. If necessary, you could tap part of this account if you were injured and needed an immediate source of funds. Hopefully you can soon recover or adapt to a new income source that would allow you to repay the amount taken from savings and continue establishing a nest egg for the future.
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Investments
If you have a stock portfolio or other investments, you may be able to set aside the premiums earned for an emergency, such as a serious injury. You could probably sell a portion of your holdings to cover living expenses, although you might have to pay a penalty and lose value on some of your investments. As with the regular savings account, you could possibly recover or replenish the losses later when you are able to return to work or begin receiving unemployment, workers comp, or a legal settlement.
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Settlement
When an injury occurs due to someone else’s negligence or intent, you may be entitled to a settlement in compensation for the losses you will sustain from the injury. If this should happen, it is in your best interests to consult a personal injury lawyer about the amount of money you will need to borrow from other funding sources if you are unable to work until the legal settlement is awarded.
Plan on setting aside enough money now to cover about six months’ worth of monthly expenses in case you are injured and unemployed for a period of time. With a plan in place, you can have peace of mind knowing that your bills will be paid if you experience a significant injury.
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Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan
