How to plan for financial emergencies!

It can happen suddenly. One minute you are in a comfortable job able to pay all your expenses, the next minute you are unemployed. Others might suddenly get sick and be faced with hefty medical bills. Their recovery might also limit their ability to provide for their families.

The financial impact of the Covid pandemic has had on the economy has certainly brought to the forefront the need to have savings. The hurricane season is also upon us which can be an additional financial burden .

The problem is that a lot of Jamaicans live pay cheque to pay cheque, so when a financial crises hits, they are totally unprepared.   Is it all doom and gloom though, or are there steps you can take to ensure that you are prepared for financial emergencies?   Well here are a few tips on planning for a financial  emergency!

Emergency Fund

The first step for preparing for the unexpected life event is to have a solid emergency fund in place. Your emergency fund should be relatively liquid and should cover three to six months of standard living expenses. Also, have some easily accessible, liquid cash on hand, just in case you need it in a hurry.

If you are single, or you are a single-income family, you may want to consider building an emergency fund of up to a year. Having a year’s worth of funds provides security for you and your family. This is especially important if you should lose your job and have a hard time finding another one, or suffer an unexpected illness where you are unable to work for an extended period and will have a gap in your earnings.

Of course it’s easy to say you need these savings, but harder to actually accumulate the funds.  The best way to do this, in my opinion, is to use salary deductions of a fixed amount placed in a special account that is not used at all.  This account  is solely earmarked only for emergencies.

Natural Disasters

It is also best to prepare for the economic impact of a natural disaster such as a hurricane.  A good emergency kit with a five-day supply of food and water is good to have on hand in your home, car, or office. The kits do not need to be very large or elaborate,  however it should include a small amount of cash and a listing of your credit cards and other accounts along with the contact phone numbers.

Emergency Cut Back Budget

As a family or as individuals, it is important to create an emergency cut back budget. This budget should leave out the things you could cut back on or do without if necessary. This will help you be ready in case you experience an unplanned financial event or a period of unemployment.

At the beginning of a financial emergency you might be so stressed that it is difficult to think clearly so it helps to have a plan already laid out that you can follow.
What are your views? Let me hear from you!

Tags: budget, emergency, finances, pandemic