by Lina Martinez
The hardest part of achieving financial stability is expecting the unexpected. Not all costs are under your control. But your budget should account for this. You should plan for the regular expenses, such as rent and food, but also set aside some money for unexpected expenses. We’ll talk about that and many other points in this article. Here’s how to safeguard your finances from unexpected situations.
Household damage or theft.
Your house is more than four walls and a roof: it’s your home. The thought of something happening to your household is probably quite upsetting, but properties are always susceptible to damage or theft. And the cost of dealing with such incidents can be extremely high. For starters, you should be prepared for natural damage, whether it’s the result of weathering or the passage of time (e.g. a storm damaging your roof tiles, your pipes freezing during winter, or your boiler breaking because it’s old). It’s good to have insurance for natural damage but also to have an emergency fund ready for household repairs that are simply the result of things wearing out. As for theft, you should have a home security system and CCTV cameras to act as deterrents to criminals. Insurance can also help to cover the cost of items lost, of course.
Accidents.
You don’t want to imagine you’ll end up getting in any sort of accident, but most of us end up in minor or major incidents at some point in our lives. Maybe you’ve been injured at work, for instance. If that’s the case then you should definitely seek compensation for any time you have to take off work. It’s important to protect your finances if your life has been affected as the result of an accident. If you’re facing legal costs for a car accident that was your fault (as the result of drink or lowered inhibitions for any other reason) then you might want to look into a DWI lawyer to help you out. Road accidents are already distressing enough, so you don’t want your finances to take a hit as well. Whilst we can’t predict accidents we might have in life, we should always be financially prepared for such situations.
Debt.
In this article, we’ve talked a lot about unexpected situations and how to protect your finances when they occur. But the thing with debt is that it isn’t always bad and it doesn’t have to be unexpected. Bad debt can be avoided. If you borrow money sensibly and pay it back in time then you’ll improve your credit score and be able to take out better loans with fairer interest rates for big purchases (e.g. a deposit on a house or a new car). As for ending up with debt that you can’t pay back, the best way to safeguard your finances from such a situation is to avoid spending in excess. This piece of financial education could save so many families from the unexpected circumstance of massive debt. Credit cards are not endless money machines. Only ever spend what you can afford to pay back. Ideally, keep your monthly expenditures lower than your monthly earnings; credit and overdrafts should only ever be used for big expenditures (refer back to the earlier examples in this point).