Preparing for unexpected expenses
3 Ways to prepare for life’s unexpected curve balls
The most important thing to keep in mind when preparing for unexpected expenses is to anticipate that they can and will happen. An unexpected expense can impact even the most thoughtful budget plan.
- Create an emergency fund - Step one is to create a liquid emergency fund with three to six months of living expenses for your household. If your household has only one wage-earner, consider a fund that covers a longer period, even up to one year. Your emergency fund will be a lifesaver in the event of job loss, or a medical issue that prevents you from working. Utilize your emergency fund as needed for other surprise expenses, such as car and home repair, but make a budget plan to replenish the funds right away.
- Prepare your “in case” budget plan - In the event of job loss or illness that prevents you from working, create a plan that outlines the bare minimum expenses you’d have to cover. Once you reduce the amounts spent on items like entertainment, dining out and other optional expenses, you may be pleasantly surprised by how you and your family can live if necessary, and you will have a budget plan you can easily put in place if faced with financially stressful times.
- Consider a Health Savings Account (HSA) - If you have a High Deductible Health Plan (HDHP) you can lower your overall healthcare costs and cover unexpected medical expenses by making pre-tax contributions to an HSA. The money you save in an HSA can be used to pay for qualified medical expenses like deductibles, copays, glasses, prescriptions and more. And, if you don’t use it, you don’t lose it. Anything you don’t spend can roll over from year to year, growing tax-free to pay for medical care later.
There are steps you can take to shield yourself from unforeseen costs. To check your account and/or connect with an Equitable Advisors Financial Professional to explore financial strategies that help to protect you from the unexpected, click here.
Equitable believes that education is a key step toward addressing your financial goals, and this discussion serves simply as an informational and educational resource. It does not constitute investment advice, nor does it make a direct or indirect recommendation of any particular product or of the appropriateness of any particular investment-related option. Your unique needs, goals and circumstances require the individualized attention of your financial professional. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (Equitable Financial) (NY, NY), Equitable Financial Life Insurance Company of America (Equitable America), an AZ stock company, and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI and TN).