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Dealing With the Financial Implications of an Emergency

Life is unpredictable. No matter how much we plan for the future, there will always be a slight possibility that something interrupts what we know and causes us to lose our financial footing. Financial security and stability should always be a top concern for anyone that wants to live a comfortable life, but there are times when freak accidents and emergencies can occur and take centre stage in our life.

These emergencies usually come with hefty bills. It could be a natural disaster that tore a hole in our roof or it could be a car fault that has left us with an extremely expensive repair bill that our insurance company refuses to cover. It could be the birth of a child that is costing you a lot of money, or it could even be the sudden passing of a loved one that drains us both emotionally and financially. There are always emergency situations that we can’t prepare for, so here’s some advice on how you can deal with the financial side of these troublesome times.


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Emergency Funds

The first line of defence you should build against financial emergencies is having an emergency fund. This is a stash of money that you set at a certain price and then work to accumulate. You don’t go above the limit you set and you don’t tap into your emergency fund unless it’s an actual emergency.

For instance, if you’ve just lost your job and need to pay the bills, then it’s a valid reason to use your emergency funds. If you have a home expense such as a repairing a broken pipe or your boiler, then using your emergency funds is acceptable as well. If you haven’t built an emergency fund by the time disaster strikes, then you might want to consider a quick loan to help you build a buffer. Of course, you’ll need to eventually pay this back, but it should be easy if you’re already budgeting for an emergency fund.

Importance of Insurance

Insurance is likely your second line of defence against more drastic emergencies. This includes crashing your vehicle, losing your car or even being injured at work or at home. Insurance does cost money, but it provides a safety net that gives you peace of mind. Even insurance on your computer and other expensive devices can help you feel safer when you’re using them. Just remember that different insurance companies will provide different levels of protection, so always read the terms and negotiate what compensation you will receive to get a better understanding.

Smarter Investments
Investments don’t always have to mean putting money into trading or forex. Investments can also come in the form of time and it’s important that you don’t put all of your eggs in one basket. If you’re pouring your heart, money and time into a career, then you need to be careful if you don’t have a backup plan. What if you’re fired? What if the company is bought out and you lose your job? If you don’t have a plan B then you’re going to end up in a financial pit that is difficult to climb out of. Don’t just pick a career based on the salary, pick a career that is a safe bet and can give you a backup plan should things go wrong.

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