Surviving Life's Financial Emergencies
Planning for anticipated expenses, like paying for your child's college education or saving for retirement, is something that most people already do. What about the unexpected financial emergencies? Tornadoes, earthquakes, house fires and other disasters rarely give advance warning and can happen anytime. Fortunately, there are steps you can be doing right now.
First, what qualifies as a financial emergency can fall into the following categories: job loss, partner/spouse passes away, you or spouse/partner becomes disabled and being a victim of a natural disaster.
Here are a few steps to take to prepare financially for the unexpected.
Build an emergency fund by setting money aside each month to establish a cash reserve equal to nine to twelve months of living expenses. Regardless of how much you are able to set aside, the funds should be easy to access. Money market or savings accounts are good options for this.
Periodically review your insurance coverage to determine what is and is not covered by your medical, car, and homeowner's insurance as well as your disability and personal liability insurance.
Keep accurate financial records by collecting and organizing information that you may need in the event of death, fire, theft or other emergency. Make sure other family members know where to find bank account and PIN numbers, safe deposit box keys, insurance policies and contact information for your attorney, CPA and other professional advisors.
Educate yourself on how to access your accounts via the Internet so you can manage your funds from anywhere.
Meet with a certified public account who can work with you to review your plan and ensure that you are well protected in the event of a financial emergency.
Additionally, here are a few items that you should have ready in case of a financial emergency:
- Identification and other key documents that may be needed to restore your financial records.
- Copies of driver's license (or state identification cards for non-drivers), social security cards, passports, birth certificates, insurance cards and your inventory of personal property.
- ATM/debit cards and credit cards — front and back.
- Phone numbers and account information at your financial services providers.
- Bank, credit card companies, insurance companies that you do business with will be helpful if you need to replace lost cards or documents or need assistance.
We cannot control all things, meaning natural disasters, so being prepared financially for the unexpected and having an emergency savings fund set up is one way we can control how we recover and get back on our feet.