A survey by Bankrate shows that only 40% of Americans can settle unplanned $1,000 emergencies like car repairs or emergency room visits, according to CNBC. While you cannot predict or control when an emergency will come your way, you should prepare for the unexpected. You can start by tracking and budgeting your finances to have a clear picture of how you are spending and identify saving opportunities. Budgeting will help you find ways to cut expenses or increase your income and plan for unexpected emergencies.
Medical Emergencies
Emergency medical services can cost a lot, even if you have healthcare coverage. That is why you need emergency savings to account for unexpected medical care. When budgeting for medical emergencies, make sure to include potential costs. Think about ER co-pay and determine how much it will cost you. Most insurers have a co-pay plan that ranges from less than $50 to over $200. Take time to review your healthcare coverage to find out your ER co-pay rate, and set aside an amount for it. Similarly, check your deductibles and co-insurance rate, and know your maximum out-of-pocket expenses. These steps will help you budget carefully for unplanned healthcare services.
The Need To Buy A New Car
Like other emergencies, preparing for the unexpected need to purchase a vehicle ahead of time is crucial. Whether your urgency is due to theft or a crash that led to severe damages, there are considerations you must make. First, determine the car model you want to purchase. Also, factor in the current buying price and cost of ownership. You can do this by researchingthe highest rated dependable vehicles on the market online. The idea is to find out which cars are reliable and worth your money based on the experiences of other vehicle owners. This move will help you start a car emergency fund where you can save a few hundred dollars every month. Besides, a car emergency fund is essential for settling unexpected expenses such as repairs and maintenance, speeding and parking tickets. Additionally, if you are unable to work for a specified period, you can withdraw money from the emergency fund to settle a car loan.
Major Home Repairs
Home appliances and systems are bound to malfunction when least expected, forcing you to pay expensive rates for repairs and replacements. The best way to avoid financial problems following unplanned home maintenance is to build allowances that address emergency repairs. A general rule is to save at least 1% to 2% of the buying price of your home every year for household maintenance, including unexpected repairs and replacements. Nonetheless, you need to consider several factors that influence emergency home repairs beforehand. That way, you will know how much you need to keep for home repairs every month.
Without a budget for emergencies, it can be challenging to overcome the financial implications they come with. Therefore, make an effort to open a savings account that caters to different uncertainties. Setting aside money for medical emergencies, unexpected home repairs and automobile expenses can save you from stacking up unpaid bills and credit card debts.