Are you prepared?
As I go about my day, I generally don’t ask myself what could go wrong. Will I fall off the sidewalk and break my hip? Will my house be broken into? Will I lose my job? Instead, I wake up, drink coffee (a must!), and then get my day started. It’s not until that one day you are in Colorado and you accidentally pull the front bumper off the car. Oh no. Now what?
When life throws you a curve ball, it sure can mess up your day. But if it messes up your day, AND you spend your cross-country trip driving with the bumper hanging off, AND you have no emergency savings to tap OR insurance coverage to help repair the damage, you’ll just have to get used to the bungee cords holding it together.
I’m sure you are thinking of your own example of when you got into a bit of trouble. There is no shortage of situations. The good news is that you can be prepared and protected with good planning.
Emergency savings: Most experts agree that we should have three to six months’ worth of expenses saved in a liquid or cash account. But if money is tight, it’s easy to put off creating an emergency fund. My advice is to start small and automate. Just $50 a week or every other week can make a huge difference, especially when starting from scratch. Over time you will see the savings add up, and before you know it, you’ll have enough to cover that speeding while in a construction zone ticket you got in Ohio.
Protecting assets: Insurance is a useful tool to hedge against financial hardships. It projects you and your family in a variety of ways. Of the major types of insurance, we have property and casualty for your home and belongings; life and disability for your income; long-term care for your assets; and health, dental, and vision for your well-being. When the time comes to get the car fixed, your auto insurance is there to help with the repair. Insurance can be complicated with coverage selections, premiums, and deductibles, but it is worth the time to review your coverage in order to protect you and your hard-earned dollars.
Take a minute to organize your accounts and insurance documents. Then talk with a financial planner about starting a savings plan and reviewing your coverage. There is no way to predict a financial emergency – but there is a way to prepare for one.
P.S. The car is fixed and ready for its next trip!
Kelly writes for us monthly on financial topics for young professionals. Join us March 29th for our Seminar Series, where Kelly educates BostonYPA on making our money go farther.