Consider having a plan for financial emergencies
When it comes to life, emergencies can crop up from any unplanned source. This is why financial planners swear by creating an emergency fund. Once you have the emergency fund in place, you will be able to ride it easily than fear the consequences. Here are some of the financial emergencies that you could face and should consider having a plan to counter.
Job Loss: We live in an uncertain and economically volatile world, and no more are there jobs with any guarantee. Job loss is one of the most prevalent emergencies, which one must plan for. There is no clear reason why one loses a job, but whatever may be the reason, have at least one month’s pay as a backup.
Separation: Divorce is becoming common and in many cases finances are the reason for divorce. A general financial emergency could be a situation arising out of a divorce for which there should be a plan in place.
Natural disaster: Floods, earthquakes and fire do not come announced. When you move into your house, keep the possibility of natural disaster in mind and insure the house accordingly to protect yourself from the financial implications of the same.
Death of a spouse: Life insurance takes care of this emergency, so if you do not have one for yourself, or your spouse – go for it. Although the emotional loss is irreparable, make sure your financial losses are under check if this emergency strikes.
Not enough for retirement: The sad fact today is that there is no guarantee that there will be money when you retire. If you are not part of a pension plan, create your own corpus to manage your retirement, else you may live in a situation that is much worse than even death.