As an adult, you no longer have the luxury of relying on your parents if something bad happens. Did the car break down? You have to pay for it. Broke your arm? You have to pay for it. Did the refrigerator stop work? Guess what? You have to pay for it, too. As a young person suddenly thrust into the world of adulthood, becoming financially independent can seem like a daunting task. However, it is definitely not impossible, regardless of what the economy columns say.
Being a financially independent adult has a lot to do with preparedness. If you’re ready to face a financial emergency when it happens, the higher your chances to come out of it unscathed.
Here are the different types of financial emergencies that you should start preparing for as early as now:
If you depend on your car for everyday transportation, the last thing you want is to end up with a repair bill that you can’t pay. Car issues can sneak up on you even if you’re regular with maintenance. And the next thing you know, you have to take it to the mechanic shop where it will cost hundreds of dollars to get the issue fixed.
One of the worst things that the pandemic has caused is the unemployment of millions of people all across the country. People weren’t expecting to lose their jobs so suddenly, and then just like that, companies were retrenching, and businesses were closing left and right.
This unfortunate event has taught us that jobs, even permanent ones, can be temporary. You never know if your office will lay off people next month or if the business you’re working for is on the brink of bankruptcy. Hence, job loss is one of the first things you should prepare for as a young adult. Even if you feel very secure in your position, you must be prepared for the unexpected.
Accidents and sudden illnesses can happen at any time. And even if you have health insurance, healthcare costs can balloon very quickly, often ending up as medical debt. Don’t wait for an illness or an injury to bury you in tons of debt. While you’re still healthy and able, prepare for any unexpected medical emergencies that might happen in the future.
Some less important appliances can go without repair for quite some time, such as your coffee maker, humidifier, and microwave oven. You can even go without a washing machine for a while and go to the laundromat. But for major appliances that you can’t go without, such as the refrigerator, stove, and heater, repairs have to be made as soon as possible.
And if you don’t know yet, appliance repairs can be quite expensive. If you’re unlucky enough, you might even have to buy a replacement. Thus, being prepared for repairs is the best way to ensure that you don’t have to go too long without your appliance.
Many young adults are renters. If you are one, then most home repairs can be shouldered by your landlord. However, in some cases, you have to be the one to shoulder repair costs. When the tenant pays for the repairs, it is usually because they are the one that caused the damage or they are doing to fix a cosmetic issue.
No one wants to think about being disabled, but it is a very real possibility that you can face. Whether it’s from an illness or an accident, a disability can quickly drain your finances if not prepared for it.
How to prepare for financial emergencies
Financial emergencies can easily drain your bank accounts and leave you feeling helpless in your situation. To avoid a financial emergency from catching you off guard, here are the best ways to prepare:
You might be young, healthy, and able-bodied, but that doesn’t mean you can’t get sick, get into an accident, or die prematurely. Get insurance to help you be prepared for sickness, accidents, disability, job loss, and death.
Build an emergency fund
Next to getting insurance, the best way to prepare for financial emergencies is to build an emergency fund. Start saving at least three to six months of living expenses in your emergency fund as soon as you become employed. This will serve as your financial safety net if you lose your job, need repairs, or have to pay for a large expense.
Debts increase your liability amidst a financial emergency. When you are faced with a hefty medical bill, for example, the last thing you want is to have credit card bills piling up as well. Thus, keeping your debts to a minimum can help you be prepared for a financial emergency.
You might not see a financial emergency coming, but you can definitely be prepared for it. Know what financial emergencies you are likely to encounter, then do what you must to be ready for them.