When it comes to building up a savings fund and living debt-free, the things you want to be ready for are things you can’t control. You can’t predict what tomorrow might bring, but if you’ve taken the time to build some savings, you’ll have a better chance to recover from the incident. So which financial Setbacks are usually the toughest on your wallet?
Employment Loss Temporarily
Losing a job can be one of the most common financial setbacks largely because of the economy in the days since the 2008 financial crisis, and the ongoing technology revolution that’s caused many businesses to change how they operate and in many cases cut employees. It’s very tough when it happens on short notice, and you might need some savings to get you by for a time until you find new employment. The situation could get tougher if finding new employment would require you to enroll in college training courses.
Despite the attempts to make healthcare and health insurance more affordable by the government, this continues to be an expense that that can put people in the hole when they don’t have savings in their pocket. It’s a good idea to buy a health insurance plan if you can, but if you can’t afford to pay for this monthly, you might need a little savings in order to offset the costs when they come up. You may also want to look into Medicaid if you meet your state’s requirements, or Medicare if you reach a certain age.
Losing your vehicle in an accident can be one of the biggest losses, and a study found by the Pew Research Center mentioned that among those who had experienced a heavy financial setback, a vehicle repair was one of the biggest causes. And that’s before you count the medical expenses which, according to George Salinas, might not even manifest until days after the accident. Car or truck accidents not only can bring heavy medical expenses to you, you might have heavy repair costs, or even have to replace your vehicle. Most standard car insurance premiums do not cover these costs, and taking the matter to court can also be very costly. Should this happen, your savings may come in handy for a down payment on a replacement car.
Miscellaneous Court Costs
There could be any reason you might have to have court costs such as traffic tickets, a divorce and child custody hearing, agreement to pay alimony or possibly having to go to small claims courts if your creditors come after you. According to the USCCA, criminal defense costs will run at least $50,000, to be paid up front. Court summons are unpleasant and the best way to stay out of court is to avoid situations that could put you there. But if you ever do get that dreaded letter, the best way to fight it is to have your finances prepared just in case you have to pay the courts.
Are you always going to have money on-hand when life’s unexpected situations come up? Not likely because things can happen so fast, and you never know if a second situation can come up as soon as you’ve used your savings on your current one. But using the times when you do have income to prepare the rainy days should always be at the top of your list.