Handling finances, however smartly done, can pose a big challenge to many of us, especially with rising prices and the struggling economy. No matter what we do it leaves us wishing we had a little more, which is even more true when unexpected expenses arise (i.e. hospital visits, etc.). No one plans a crisis situation in their lives, but at some time or the other most of us have been faced with one, making us press the panic button. Every person goes through different situations and it is important to take them into consideration when planning finances. Here are five that top my list.
- Auto Repair
- Sudden unexpected loss of employment
- Property damage
- Medical emergencies
- Legal issues
These in my list and any other financial emergencies have one thing in common: they glare at us in the face asking to be attended to immediately. Cash crunches can be a big challenge if we do not have savings to adequately cover them. Having to borrow from family or friends can be hard to do, and borrowing from a money lender would mean having to return that money with interest which can be quite high sometimes.
Developing a habit of saving and creating a cash cushion to fall back on for unexpected emergencies thus proves to be a great option. A poll conducted by the HSBC Bank has found that 40 percent of Americans have saved just one month or less of basic living expenses. However overwhelming it many sound, experts say that you should have about three to six months of living costs set aside to be able to provide that financial cushion for you and your family.
It is never too late to start saving for the rainy day, and there are money management experts to guide you through should you require. But at the end of the day, the bottom line is that wisely made savings go a long way in taking the stress out of crisis situations… or demons, as I like to call them.