How to Deal with These Six Financial Emergencies

Throughout your life, there will be a whole host of financial emergencies that throw themselves before you. And the thing about most of the items on the following list is that you never know exactly when they are going to strike. All you can do is be as prepared as you can by diversifying your income stream, increasing your assets and putting money aside for any events that may befall you. It is a good idea to know what some of the most common financial emergencies are and this article will give you a fuller picture.

Job Loss

This is probably the one that you thought of first and there is no doubt that it can be an extremely stressful and difficult situation. A simple plan is to have at least three month’s salary saved so you know that you have a financial buffer in case the worst should happen. It is also a good idea to think about alternative revenue streams. This may be through freelance work (which is becoming increasingly prevalent) or making some extra cash through the sharing economy by renting out a spare room, selling you old possessions or some storage or driveway space.

Divorce 

No one wants to think about getting divorced but the people who are the least prepared for it are often the ones that are hardest hit. One course of action that more and more people are taking is forming a prenuptial agreement. And it should also be said that divorce should be seen as a last resort as it sometimes turns out to be a permanent solution to what may be only a temporary problem. 

Natural Disaster

Some areas are more likely to be hit by natural disasters than others and if your home is at risk, the first thing that you need to do is make sure you have the right insurance cover to deal with the situation. You should also think about where you would be able to stay if your permanent residence is suddenly not available. Taking preventative measures is also paramount, so you should make sure that you are well versed in fire safety to start off with.

Being Accused of a Crime

This is one that you may not have thought about before, but there is no doubt that it can end up being costly. For example, if you run a business then an unexpected lawsuit could seriously threaten your livelihood. And if you are accused of any crime, this may affect your current employment situation. It is worth knowing about an affordable criminal defense attorney as they will understand in greater detail what your next course of action should be. If you are accused of any crime, you should make sure that you act swiftly as it is a problem that won’t go away by itself and it is likely to become worse over time.

Bankruptcy

Bankruptcy isn’t just something that can affect big business owners – it is a risk that anyone who racks up debt on their credit cards takes. So, before planning for any of the other financial emergencies listed, you should first work to clear off your debts at these could end up causing the most damage. Of course, going into business is a risk, but you should make sure that you mitigate the risk by not getting in over your head.

Death of a Loved One

Of course, no one wants to think about any of the items on the list potentially happening to them but the death of a loved one is certainly the most traumatic. So, if you have people who rely on you financially, then life insurance is the first thing that you will want to look at so they are not left in an extremely difficult situation. And there are also other manners to take care of like wills, power of attorney etc. Simply making sure that all these affairs are in order can help to give you great peace of mind.

These six points represent the most common types of financial emergency that may strike you at some point during your life. Ultimately, it is all about being prepared for each individual situation so you are not left worrying after the event has already happened. Hopefully, this article has given you an overview of some of the basic steps you can take to prepare for each of these events individually, but also make sure that you have money set aside to take care of any of these things in general.