According to the Federal Reserve Board’s 2023 Economic Well-Being of U.S. Households survey, 38% of Americans lack the resources to cover a $400 emergency. Imagine all of a sudden your water quits running, your fridge quits refrigerating, or your car goes from making that funny noise to making no noises at all. Not many things are actually all that unexpected. While you may not know what or when, you can still prepare to deal with the unexpected by creating categories of savings to buffer the financial pain when hard times hit.
Can’t Afford an Emergency Fund?
Frankly, you really can’t afford to NOT have an emergency fund. The consequences of trying to deal with expenses that we’re unprepared for can land anywhere between inconvenient to catastrophic. An emergency fund is simply money set aside to cover sudden expenses such as medical emergencies, home repairs, or loss of income. Anything you can set aside can help in an emergency, but many financial institutions say that three to six months’ worth of living expenses is what you should be shooting for. Determining the appropriate amount depends on your personal circumstances, monthly expenses, and income.
Pay Down Your Debt
One of the best reasons to have a credit card account is so that you have access to funds when you need them. Carrying significant debt, especially high-interest credit cards may leave your credit limit stretched too far with no room left to help you cover costs in an emergency. So, it pays to keep your credit utilization low so that credit card payments don’t eat up a huge chunk of your monthly income.
Insurance: You’ll Never Need It Until You Need it
Insurance is an essential tool in your financial planning toolkit. It provides a safety net, ensuring that you're covered when unexpected events occur.
Learn more about how Canopy can help you find coverage to help when you need it, just go to https://www.canopycu.com/insurance/. The right insurance coverage can help provide peace of mind, against unforeseen events. Interested in learning more, just ask us.
Planning for Health Care Costs
As you age, health care costs typically become a bigger part of your overall expenses. So, it makes sense to begin planning for health-related expenses sooner rather than later. Health Savings Accounts are a great way to save for medical expenses while taking advantage of tax benefits.
Being prepared for unexpected events can help reduce your stress, give you peace of mind, and provide the confidence that only a well thought out plan can provide.