Almost everyone faces unforeseen emergencies at some point, which can result in significant expenses.
In absence of proper planning and preparation, these sudden, unplanned expenses can cause your savings to evaporate, or force you to take out high-interest loans that could create a debt spiral.
Here are four common emergency expenses and ways to prepare for them.
Medical emergencies
Medical emergencies, such as a sudden injury or illness, can strike at any time, and many people don’t have the savings to cover an unexpected hospital bill.
You can prepare yourself for this risk by ensuring adequate health insurance coverage for you and your family.
To begin with, look over your insurance policy and see what it covers.
Does your plan cover only a certain percentage of bills? If so, you’ll want to know how much you’ll be responsible for in the event of a medical emergency, and set aside an appropriate amount in your emergency funds.
Similarly, you should know how much is the deductible you must pay before the insurance kicks in, and keep sufficient savings at all times for this expense.
Pet emergencies
One of the common unexpected expenses pet owners face is emergency care for their pets. Dogs and cats can get hit by cars, fall into creeks, and get sick just like people do.
As a pet owner, you know that your animal is integral to your family. Whether it’s an accident where your beloved pet gets hurt or a genetic condition that requires special treatment, these circumstances can be scary and expensive.
Here are some tips on how to handle pet emergencies and unexpected expenses:
- Reach out to friends and family members who might be willing to help financially.
- Ask your veterinarian if they have payment plans where they can bill over time; sometimes clinics are more flexible than people think!
- Look into financing options at local banks or credit unions, as well as online lenders.
- Contact state assistance programs for low-income households with pets in need of medical attention.
Auto repairs
Auto repairs can be one of those unforeseen expenditures that hurt the bottom line at the end of the month. It’s always a good idea to set aside some money for unexpected car repairs.
Here are two important steps you should take to prepare yourself for the eventuality when your car breaks down:
Check what your auto insurance covers: If your car is starting to show signs of wear and tear, it is time to check your insurance policy. If it does not cover most of the repair costs, you should consider increasing your coverage or add special riders for accidental damage and other unforeseen events.
Keep emergency savings for car repair: Your car may be on its last leg or might need several repairs in quick succession, which could be hard to afford. You should save up to 3-6 months worth of income in emergency funds, so that you can pay for a major car repair bill following an accident or a mechanical breakdown.
Home repairs
When the roof needs fixing, the HVAC system needs a replacement, or the kitchen and bathroom require a major renovation, it can cost a substantial amount of money. Serious home repairs are often an unavoidable expense for the safety and comfort of the occupants.
If your home is old and you know it might need repair anytime, the best way to prepare yourself is to set aside a small sum of money every month just for this future expense.
If you do this you won’t have to worry about an emergency where you have to use credit cards to pay for house repairs or, even worse, file for bankruptcy.
Another option is getting a line of credit from a lender such as your bank or credit union. These types of loans can be used in various ways, including paying off debt and other unexpected expenses that may arise when you own a home.
