Unexpected life dramas affect everyone. Whilst you shouldn’t have to live in fear, it’s good to prepare for these eventualities so that when they hit, they’re not as much of a shock mentally - and financially.
The common types of dramas that can hit are endless but include fire damage, theft, illness, car problems, family tragedies, job redundancy and. Hopefully, no person should have to deal with all these dramas! However, you’re very lucky if you can get through life unscathed by any of them. Whilst life is going smoothly, here are some ways to get financially protected, so that when the worst hits, your bank account won’t even notice it!
Set aside some savings
It’s recommended that you set aside 3 – 9 months worth of income. This should be enough to take on any big hits and prevent you from having to resort to a hefty loan. Of course, doing this is easier said than done. You can always start by paying small weekly or monthly amounts into it. Make sure to put it in a high interest account such as an ISA and over time it will pay for itself. Just remember not to dip into it unless it’s a real emergency - expensive Christmas presents don’t count.
Take out insurance
Make sure to take out insurance for the items that are most costly/important to you were they to be taken away. The NHS thankfully already takes care of healthcare for us and car insurance is already mandatory. The next biggest costs are your home and an often overlooked expense – human life.
Most of us don’t look beyond our own existence, but it can be a big cost on everyone around us, especially if you’re the main breadwinner. Yes, it’s gloomy, but it’s better to have your loved ones celebrating your life when you kick the bucket, than mourning the crippling debt that you’ve put them in. What do you think?
Be prepared to change your lifestyle
Make a list of all the most important expenditures in your life. Know which ones you’d be able to sacrifice were an emergency to occur, and which ones you must stay on top of (priority bills, taxes, rent/mortgage etc.). In a crisis, most of us can think irrationally and get so distracted that bills get forgotten about and start piling up, caught up with other big expenses. It’s best to record everything whilst you have a clear head so that when the stress hits you can always rely on your notes to keep you afloat.
Know that there is support for you if you need it
Every day someone is facing a costly life drama. Don’t be afraid to approach charities that are invested in helping people in such situations. Any family members you may have will also try and support you. If your TV has been burgled, someone kind may lend you a spare one for free. All of this cannot be prepared for financially, but it’s worth making a mental note of. The generosity of people can be surprising in a time of need.
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