While a budget can help you keep track of daily expenditures and monthly expenses, it can do little to prepare you for the many surprises that life always seems to bring. At some point, the car will break down, a job will be lost, illness will strike or some other surprise will rear its financially devastating head. Since you don’t know what surprises your life will bring, it can be hard to plan. Here are a few tips to help you prepare and handle these financial surprises when they do strike.
Get Out of Debt
Probably the most common theme on all personal finance sites is the great need to get out of debt. If you aren’t spending your monthly income on debt, you will be better able to handle unplanned and unexpected expenses. Start paying down your debts today. When trouble does come, it will be easier to borrow money if necessary if you aren’t already buried in debt. Additionally, you will have more money to save each month if you aren’t spending it on interest and fees. Make a plan and stick to it and start working on eliminating debt.
Make Sure You Have Enough Insurance
You can avoid some major financial disasters by simply having enough insurance. Make sure that your insurance policies are up to date. Also make sure that you have enough coverage. Insurance costs a little each month, but is a lot easier to pay than one huge expense down the road. If you want to protect yourself from surprises later, get health, life, car and home (or renter’s) insurance today.
You also need to build a reserves whenever possible. Have a little extra money in your bank account, a little extra cash in your house and some extra food in your cupboards. If you have a little more than you need now, it can help sustain you when times get tough.
Plan for the Future
Life is uncertain. However, you can plan and minimize your risks. What would you do if you were to lose your job? Do you have a backup plan? What skills could you learn now to help you in the future? If you can learn to do a job on the side or get a little more education, you may be better qualified for future positions later. Come up with a backup plan and have ideas in mind if your situation should change.
Surprises will happen; plan for them. These ideas will help you prepare for the many financial surprises that wait in your future. Remember if you don’t plan ahead, you are just asking for trouble.
What ways do you prepare for life’s little surprises?