Probably the biggest problem in personal disasters regardless whether it is a catastrophic illness, losing your job or a family emergency such as a death in the family is how it affects us financially. When you are already stressed out because the stress and challenges of the situation, the last thing you need to be worrying about it money.
Unfortunately, to quote an article from Bankrate.com:
“…24 percent of Americans have no emergency savings at all. Another 22 percent said their emergency savings would cover, at best, three months’ worth of expenses.
Only one in four said they have six months’ worth of expenses for use in emergency, the minimum recommended by many financial planning experts.
“It still looks like a lot of people are skating on very thin ice,” says Frank Armstrong, a Certified Financial Planner and president of Investor Solutions in Miami.”
What this means is that when personal disasters strike we are not prepared, but there is mor to financial preparedness than just having savings. Having proper insurance on your car, your home, you belongings, your life and your health can make a huge difference. When you are une\insured or under-insured it can be devestating.
Many women who find themselves suddenly widowed and have to take on the role of the main breadwinner with no notice find themselves unable to meet their financial needs and often lose their homes and/or end up on welfare, assuming they even qualify. In the case of a long illness with growing needs in addition to health care, people fnd themselves in dire straits often leading to bankruptcy or worse.
So if you don’t have a savings account or your account is under-stocked, what then? Start today where you are and start putting a set amount into savings every month and leave the money alone.
Reduce your debt. Oftentimes when your situation changes and financial challenges arrive you might have been ok if not for large credit card or other loans and bills you may owe.
Review your insurance and determine if you have enough. If you have elderly parents you might also consider an elder care policy to prepare for future health care and maintenance needs.
Often implementing these things means you might have to cut back on a few luxuries, but in the long run it is well worth it, if you find yourself in a position where there is suddenly increased needs and no income.
We will be doing a series of interviews with experts who can help us learn how to save, how to get out of debt, how to figure out our insurance needs and how to save money to increase the efficient use of our financial resources to allow us to have money to put on the bills or put into a savings account… Stay tuned.