Six Common Emergency Expenses: How to Prepare
If you’ve ever had to build a budget before, you know how difficult it can be to prepare for everything that might come your way. This is especially true if you’re trying to budget for a family. While specialists argue that most of the items listed below aren’t truly “unexpected”, most American households are unable to prepare for them in the current financial climate.
Therefore, for the sake of this article, we’ll count them as “unexpected”. In other words, these are emergencies that can catch the average American household off-guard.
Emergency Room or Surgical Expenses
It’s practically impossible to determine when, how, and why you’ll need to make a trip to the emergency room. If you have children, this is probably something you should expect at least once during their childhood, if not multiple times. If you live with other adults, you can reasonably assume that healthy adults will spend the majority of their time outside their local hospital.
But, that’s not always the case. Sometimes, bad things happen. Car accidents, work-related incidents, terminal illnesses, and other unexpected medical problems can happen. When these take place, insurance companies only cover emergency room trips and surgical expenses to an extent. In most or all instances, a co-pay will be required from you.
The best way to prepare for this emergency is, of course, to obtain quality insurance. Unfortunately, that’s the only thing that many Americans are able to do. Medical expenses are astounding and have the ability to knock many families out of their income bracket if they aren’t prepared.
It’s a bit easier to prepare yourself for this problem, mostly because you can assume your pet is going to need medical assistance at some point during its life. If you plan on buying a pet (especially a cat or dog), you need to think about the long-term expenses. Your budget should include more than food, grooming, and shelter. You should also plan on several trips to the vet. If you can’t reasonably afford the consequences of having a pet, don’t have one. It isn’t necessary.
Broken Electronic Devices
There’s nothing worse than a broken computer or cell phone. When this happens, you have no choice but to get the problem fixed as soon as possible. If you need your cell phone or laptop for work, failing to remedy the issue could cost you an unimaginable amount of money. This is why, when you have enough money to purchase the electronic device, you need to account for warranty costs. It’s always better to have a lesser-grade product with a full warranty, than a higher-grade product with no protection.
When buying a used car, you aren’t given the option of a warranty. When you lease a vehicle, many of the ongoing problems can be fixed by the manufacturer. Unfortunately, this isn’t the case when you try to save by purchasing an older vehicle. In this instance, you should set aside at least $500 when you buy the car to account for repairs. It’s better to purchase a $2000 car and have $500 for repairs than it is to purchase a $2500 car and have no money for repairs.
If you own a house, you should expect that you’ll probably need to spend money on repairs over the years. However, how will you know when to set that money aside? And where are you going to get it? Some families put a fair budget of money aside when purchasing a house for possible repairs. As the running theme in this article shows, it’s better to have a slightly cheaper home and have the money for repairs than it is to have an expensive home and no money for repairs.
Some problems are less easily solved. When family emergencies take place (i.e. – the death of a loved one, bankruptcy, and prison time), members have no choice but to spend more money than they have. This is how many households go into debt. Funerals have to be paid for. Phone calls need to be made from prison. Rent needs to get paid. Credit cards are maxed out and loans are taken out. There’s little to no choice in this matter. What has to be done, gets done.
Luckily, there is something you can do in order to delay direct payment in the event of these emergencies. You can turn to credit cards, SDCs (or Small-Dollar Credit loans), or family members. American families have always found a way. Finova is here to help you continue to find a way.