Nobody likes to worry about the prospect of an emergency. Unfortunately, by nature, emergencies can happen at any time — and often when you least expect them. Consequently, there is no time like the present to start preparing. While not all emergencies can be solved with money, having a budget for emergencies can ensure that you have funds ready to deal with whatever life throws your way. So, in today’s post, we will look at how to set a budget for emergency savings!
Plan Ahead For Medical Procedures
Some of the biggest costs you will face in your life will be related to medical bills. While it may not be pleasant to think about, we will all face medical issues at one point or another. And though not every medical procedure or treatment constitutes an emergency, it’s important to factor medical costs into your emergency budget. For example, you may find yourself with a painful bunion that requires the experts at northwestsurgerycenter.com. This may not seem like an emergency, but you will definitely want to have funds set aside to ensure that you can get your bunion removed by professionals.
Make a “Worst-Case Scenario” List
In addition to medical emergencies, you should also factor in a wide range of possibilities and potentialities in a “worst-case scenario” list. This list should be personalized to your life circumstances and finances. For example, if you use a personal vehicle to commute to and from work, what happens if that vehicle suddenly breaks down? Or if you lose your primary source of income, do you have enough savings to cover your expenses until you can find new employment? It may not be a “fun” list to make, but it is definitely a necessary one!
Ensure Your Savings Are Readily Accessible
Many people are great at putting aside savings, but not always in the best places. This is especially true for people who invest their savings. While investments like mutual funds, stocks, or ETFs usually offer the best ROI (especially compared to traditional savings accounts), they make your money less accessible. Why? Because you will need to pay taxes on the gains from any invested assets that you choose to sell. As a result, it’s often better to put your emergency money in a traditional savings account. This way, your money can accumulate interest, but it is also readily available when you need it.
Consistently Contribute to Emergency Savings
Finally, an emergency savings account is useless if you never contribute to it. Moreover, if your contributions are few and far between, then you may not be saving up enough to make a difference if and when an emergency does occur. So, create a budget plan that forces you to contribute to your emergency savings on a regular basis. This way, you will be financially prepared when an emergency hits!
Did you find our guide on how to set a budget for emergencies useful? If so, be sure to check out some of our other great posts on Budget and the Bees today!