Dealing with Life’s Financial Emergencies
Financial emergencies happen to everyone sooner or later, and how you prepare for those inevitable emergencies can make all the difference in the world. While no one likes to think about being the victim of a flood, fire, hurricane or other emergency, it definitely pays to be prepared.
The first step in preparing for an emergency, of course, is to insure your valuable items. Chances are you already have insurance for your car and your home, but it is important to make sure your insurance covers the items in your home as well. If you have especially valuable items in your home, such as collectibles or antiques, they may need to be insured separately, or included as a rider in your homeowners’ policy.
It pays to document the items in your home with photographs as well. In these days of digital photography this type of documentation has never been easier. Take an hour or so to snap some digital pictures of the inside and outside of your home, then upload those pictures to one of the many photo sites on the internet. That way you will have a permanent record of all the items in your home to turn to, even if your home and possessions are damaged in a fire, flood or other natural disaster.
It is important as well to keep your insurance information updated. Reviewing your insurance information once a year is a good way to make sure you do not miss any new items. When you purchase expensive items like furniture or electronics, be sure to keep a copy of the receipt. This will make it easier to document the value should a dispute arise later on.
Over and above the need for insurance there are other important ways to prepare for life’s emergencies. The primary method is to establish a solid emergency fund. Most financial experts recommend setting aside a minimum of six months’ worth of living expenses in an emergency fund. This emergency fund should be reserved for true emergencies, such as the loss of a job or an unexpected medical expense. It should not be considered a source of ready cash. For this reason, it is a good idea to refuse the ATM card that comes with the account. Having an ATM card available can tempt you into tapping the emergency fund prematurely.
It is also a good idea to rent a safe deposit box. Keeping important documents, such as wills, deeds, titles, birth certificates, insurance policies, etc. in a safe place will save you a lot of time and hassle in the event of an emergency. Renting a safe deposit box is a low cost way to gain much needed peace of mind.