Throughout your life, there will be a whole host of financial emergencies that throw themselves before you. And the thing about most of the items on the following list is that you never know exactly when they are going to strike. All you can do is be as prepared as you can by diversifying your income stream, increasing your assets and putting money aside for any events that may befall you. It is a good idea to know what some of the most common financial emergencies are and this article will give you a fuller picture.
Job Loss
This is probably the one that you thought of first and there is no doubt that it can be an extremely stressful and difficult situation. A simple plan is to have at least three month’s salary saved so you know that you have a financial buffer in case the worst should happen. It is also a good idea to think about alternative revenue streams. This may be through freelance work (which is becoming increasingly prevalent) or making some extra cash through the sharing economy by renting out a spare room, selling you old possessions or some storage or driveway space.
Divorce
No one wants to think about getting divorced but the people who are the least prepared for it are often the ones that are hardest hit. One course of action that more and more people are taking is forming a prenuptial agreement. And it should also be said that divorce should be seen as a last resort as it sometimes turns out to be a permanent solution to what may be only a temporary problem.
Bankruptcy
Bankruptcy isn’t just something that can affect big business owners – it is a risk that anyone who racks up debt on their credit cards takes. So, before planning for any of the other financial emergencies listed, you should first work to clear off your debts as these could end up causing the most damage. Of course, going into business is a risk, but you should make sure that you mitigate the risk by not getting in over your head.
Death of a Loved One
Of course, no one wants to think about any of the items on the list potentially happening to them but the death of a loved one is certainly the most traumatic. So, if you have people who rely on you financially, then life insurance is the first thing that you will want to look at so they are not left in an extremely difficult situation. And there are also other manners to take care of like wills, power of attorney etc, which the right law firm like https://www.taylorlg.com/ can deal with. Simply making sure that all these affairs are in order can help to give you great peace of mind.
Hopefully, this article has given you an overview of some of the basic steps you can take to prepare for each of these events individually, but also make sure that you have money set aside to take care of any of these things in general.