Within your monthly budget, you likely have all of your typical expenses covered so that you’re not consistently running in the red. However, there may very well come a time when you become responsible for some expenses that you didn’t anticipate. From getting in a car accident to having a medical emergency or losing a job, it’s wise to have a plan in place to ensure your financial stability even if things get a little crazy for a few weeks or months.
To help you in preparing for the unexpected, here are three ways to avoid going into debt due to accidents or emergencies.
Understand Your Insurance Coverage
The best way to avoid having to pay a large sum of money for any kind of emergency is to have the right insurance and to fully understand your insurance coverage.
According to Kerri Fivecoat-Campbell, a contributor to Forbes.com, it’s wise to call your insurance carrier if you’re ever unsure about your coverage or how to qualify for the maximum benefit your coverage allows. Additionally, if you have something coming up that you’re going to want to use your insurance coverage for, make sure you get the right approval or assurances that you won’t be on the hook for the entire cost of your bill. Otherwise, you could wind up needing to pay so much money that you could go into debt for it.
Protect Your Health
For many people who go into debt due to accidents or emergencies, the vast majority of this debt is due to expensive medical bills. And while some of these things can’t be prepared for, like broken bones or other accidents, many medical issues can be avoided by taking proper care of your body.
One great way to do this, according to Tim Lemke, a contributor to WiseBread.com, is to have medical insurance that allows you to get preventative care. This will enable you and your doctor to recognize health problems before they turn into medical emergencies. Additionally, you should try to live a healthy lifestyle so you can avoid the health issues that come with things like obesity, diabetes, and more.
Create An Emergency Fund
To be in the best possible financial position when accidents or emergencies do occur, you should make it a priority to have an emergency fund of money that you can dip into when you need it.
Ideally, Bill Fay, a contributor to Debt.org, recommends that you have at least six months’ worth of your normal expenses in your emergency fund. This will allow you to have enough money to cover most emergencies, at least so that you won’t have to go into debt in order to weather the storm.
To help you remain financially stable even during unstable times, consider using the tips mentioned above to best avoid falling into debt.