Just In Case: How to Budget for The Unexpected
Monday, November 9, 2015, 6:00 AM | Leave Comment
Sometimes in life, the unexpected happens. While we all want to think that misfortune will never happen to us, the truth is that sometimes it will.
In these unfortunate circumstances or tragedies, we are better off if we have the financial means to ensure that we and our families are cared for during our time of need.
From an automobile accident to a divorce or marital separation, having a financial safety net can be a godsend.
The following are some ways that you can budget for the unexpected.
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Determine How Much You Can Set Aside Each Month
The best way to budget for the unexpected is by putting a small amount of money aside each month.
You should sit down and determine how much you can afford to put into savings each month.
You shouldn’t set aside so much that your quality of life is hindered, but you shouldn’t put aside so little that you couldn’t ever feasibly save enough to actually help yourself and your family in a time of need.
Talk to a financial planner if you’re having a hard time creating a plan and a budget.
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Find A Savings Account That Works For You
It’s generally not a good idea to put your “rainy day” money into investments.
Remember, this should be money that you can access at a moment’s notice in the event of a crisis.
Having money in the market doesn’t help you when you need it now.
Rather than invest your emergency fund, shop around for the best savings account that will generate you the best monthly interest while ensuring that your money is accessible to you whenever you should need it.
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Don’t Touch
When you have money in the bank that is specifically for an emergency that has yet to happen, the temptation to dip into it for “little things” can be huge.
However, these “little things” can start to add up and eventually you may come to find that there isn’t much money left in your account at all.
Resist the urge to dip into the account, no matter how small the amount you need might seem.
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Hope for the Best, Plan for the Worst
Life is full of unexpected twists and turns, many of which can end up jeopardizing your finances if you’re not adequately prepared.
The best offense against these is, as they say, a good defense. Make a goal to save for all plausible expenses, like car repairs and unexpected tax penalties.
Most people forget to consider the possibility of an accident compromising their ability to make a living, but planning for this is hugely important.
If you are injured in the workplace, for example, your compensation may not initially cover all your medical and other expenses.
A specialist from Rosengren Kohlmeyer Law Offices says things can go wrong very quickly if there’s a problem in your worker’s compensation case, which is why it’s important to have an attorney to represent your claim.
Planning for a debilitating injury or other unfortunate circumstance may seem cynical, but it’s one of the most proactive steps you can take towards securing your finances.
If you follow these tips, you can create an emergency savings account that will help you in your time of need.
In a best case scenario, nothing serious will occur and you will instead have a nice amount of money to leave your children or to fund a college tuition someday.
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