There are both positive and negative surprises, and when the latter involve money, they can be a major drain on your wallet if you don’t prevent them wisely.
Who doesn’t like surprises? When it comes to financial matters, the reality is that if it’s not a raise or winning the lottery, most surprises can be unpleasant. Dare we say, it’s likely that everyone has experienced some unforeseen event that has thrown their pocketbook out of balance. If it’s something we already know is going to happen, what’s the point of writing it down? Because it is precisely from the knowledge of these 5 situations that prevention is obtained and, after reading this article, you should have enough tools to solve any problem.
Surprise 1. Losing your job
Nobody wants it and many people are lucky not to have this surprise, but even so, the active workforce always have latent the possibility of losing their job. About six million people leave or lose their jobs each month in the United States, according to GoBankingRates. Fortunately, several states across the country offer their own unemployment benefits.
Becoming unemployed is one of the most unpleasant things anyone can face. Worse if they are financially unprepared. Experts say that an effective emergency fund is one in which you have 3 to 6 months of monthly expenses saved. For someone who is unemployed, it’s an incredible financial lifeline.
Surprise 2. Medical Emergencies
If you didn’t understand with Covid-19 that health is important and medical services are expensive, then you didn’t learn anything from the pandemic. If you get sick or have a serious injury, you will most likely end up in the hospital and each day will rack up extensive medical bills. About 18% of all U.S. adults have medical debt in collection, according to a Journal of the American Medical Association (JAMA) study conducted in 2021. The average amount of unpaid debt is $429.
In the United States, there are Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), which are special savings accounts for medical expenses. Check their characteristics very carefully, because some of them can be useful immediately or permanently, regardless of the time you use them.
Surprise 3. Taxes
We all know that we have to file taxes, however, for many people who are not financially organized, they end up being surprised by their tax bill every year. Depending on your earnings, you may be able to avoid paying high amounts to Uncle Sam if you take advantage of the deductions and tax credits you qualify for.
Surprise 4. Home Repairs
If you own a home, you may be familiar with the frustration of suddenly dealing with a leak or a broken appliance. These types of repairs are necessary to keep your home running, but they can cost thousands of dollars that you may not be prepared to shell out right away. Depending on the type of damage, you should consider taking out homeowner’s insurance to prevent these types of situations from catching you off guard.
Surprise 5. Natural Disasters
Whether you have to deal with floods, hurricanes, earthquakes, wildfires, tornadoes, among others, most U.S. states are vulnerable to natural disasters. Nature remains unpredictable, so when it strikes, it takes a heavy toll on American households and their pocketbooks.