July 5, 2022 | Article | 3 min Personal insights
How to Prepare for the Unexpected (No, Not the Zombie Apocalypse)
We can plan as much as we’d like, but life will inevitably throw a wrench (or five) into our plans. Having a safety net to bounce back up after life knocks us down can make a tough situation easier to handle. What if your furnace stopped, your car suddenly broke down or you found yourself with surprising medical bills?
Most financial advisors agree that we should have an emergency fund that can withstand three to six months of living expenses. The best way to accomplish this is to develop a rainy-day savings plan. Set a monthly savings goal and stick with it, and make sure you save a portion of any lump sums you may earn as well, such as your tax return.
Another method is to leverage the equity that you’ve built in your home. Home Equity Lines of Credit are great resources for an emergency expense due to their low interest rates and flexibility. When you need cash quick, accessibility is important. By simply writing a check or making a transfer, you can draw off your line of credit when you need to use it. Paying it back will be much more manageable than credit cards because the low interest means smaller payments.
Regardless of your method of preparation, the act itself of preparing is paramount to not getting caught in a bad spot when the unpredictability of life inevitably happens.