JOIN USA secure financial future is on everyone’s wish list and we work hard, plan, and save to achieve our financial goals. While some expenses are planned and can be prepared for, saved for in advance, there will be other expenses that will not be as predictable.
These surprises can be something as simple as having to purchase a new pair of glasses, a new phone, last minute travel or costlier expenses such as medical expenditure. The key to keeping your preparations realistic is to weigh the possibility of a particular event actually happening against the amount of work needed to prepare for it.
Here are a few examples of the situations that you might have to face unexpectedly and what you should do in such cases:
Unexpected medical expenditure: One tends to ignore or postpone the purchase of a health insurance policy often stating that they don’t ‘need’ it right now or they feel that they are healthy and do not need it yet.
But accidents or any other kind of unexpected medical situations can come as unexpected financial blows as well. Medical bills add up quickly and all it takes is one serious illness or accident to find yourself deeply in debt without health insurance.
What you should do: You should make sure you have adequate health insurance coverage so that you are insured against medical expenses, expected or unexpected.
Job ‘In’ security: Be it a multi-national that you work for, or a promising startup, job security is a myth. If you think your job is at risk, you need to make a plan to prepare yourself emotionally and financially before any layoff happens, so that you can survive when it happens.
What you should do: Start by determining the minimum amount of money you need to cover basic costs, such as food, housing and utilities. If you find that just restricting the budget will help you with lost income, put that money in an emergency fund.
Poor investment decisions: Sometimes we tend to invest in assets that only benefit from capital appreciation, which could turn out to be very poor financial decisions.
We think the future is more predictable than it really is. For example, with respect to investing in real estate, it is not wise to rely on future growth in value, as a sudden change or halt in construction can derail your future plans.
What you should do: Do efficient financial planning before locking your hard earned money in non-liquid assets. Investment decisions need to be made with the end goal in sight, as this will reduce the risk level.
Family responsibilities: At a time when your career is reaching a peak and you are looking ahead to your own retirement, you may find yourself in the position of having to help your children with college expenses or you may need to support your parents. Your desire to help should be supplemented by adequate financial resources.
What you should do: Investments and savings for financial protection in instruments such as savings products, life insurance, disability insurance, and retirement savings vehicles can ensure you and your family are provided for at different stages in life.
Natural calamities: When a natural disaster strikes, there are a lot of things that you will have no control over. In adverse calamities, the house you live in might get destroyed along with your belongings. In such situations, medical emergencies will also add to the financial strain. Furthermore, you might not be able to go back to work for some time.
What you should do: Irrespective of the neighbourhood you live in, whether it is prone to natural disasters or not, having your home insured under an appropriate home insurance policy will ensure that your home and belongings are protected.
Invest time and effort in purchasing the right policy for your home, so that it can come to your rescue in the time of need. Additionally, the health insurance policy can protect you against the medical expenses that may result from the calamity.
There will be many situations that will be out of control that will lead to expected or unexpected expenses. While it is not possible to prepare for everything in advance, ensuring that you have a financial cushion to fall back on, will help soften the impact slightly, if not completely.
(The writer is CEO of Scripbox)