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An unexpected event can affect a person’s financial situation at any given moment. To lessen the impact, you should prepare for emergencies by creating a financial plan. Here are 6 steps you can take to prepare for unexpected events.
- Start an Emergency Fund. You should have 6-9 months’ worth of expenses saved in your emergency fund. This will help you stay financially afloat if an unexpected event occurs.
- Check Your Insurance. It is vital to ensure you have sufficient insurance to cover your circumstances. This includes potential health, car, home, or renters’ insurance coverage.
- Plan for Natural Disasters. Depending on where you live, you should have flood, hurricane, or earthquake insurance. Organize your financial documents so you can easily bring them with you anywhere.
- Negotiate with Lenders. Call your lender ASAP if you’re unable to pay your debt due to an emergency. Calling your company can result in a lower interest rate, waived fees, & more. Enroll in a debt management program if you don’t receive help from your creditor.
- Make a List. Write down all the potential events that could happen. Determine how much each would cost you and what your action plan would be.
- Create a Backup Budget. Review your budget. Cut out unnecessary expenses so you have more money saved in case of an unexpected event.