We talk budgets all the time because things come up that we all suddenly need money for. Just last week one of our clients needed to pay for a quick airplane ticket and if he hadn’t had the extra $1,000 available, even if it left his account depleted, he’d have had some real problems.
Suffice it to say, most of us live paycheck to paycheck. If we budget at all, it’s to make sure we can pay the bills we currently have, buy food and maybe partake in a bit of entertainment. And yet danger is always lurking around the corner. Thus, these 4 things you probably need to think about:
1. Your vehicle has issues.
Think about it; you’re driving around all nice and comfy when you hear that little clunk, maybe a squeal or even a pop. Are we talking engine, brakes, or tires? Doesn’t matter because all of them will cost you something. If you took your car for inspection and it didn’t pass because your brakes are bad, would you have the money to repair them, which could run somewhere between $350 and $800? One tire might cost you $150 but what if you had serious issues? And engines… I don’t want to depress you.
Although it might be helpful to have a Goodyear or Pep Boys credit card (or whatever you have in your area), you still have to pay the bill, whether all at once or monthly. That’s another thing eating into your normal budget that you didn’t plan on. For that matter, based on the price of gas at the present time, you’re probably paying twice as much as you were earlier in the year, another thing you hadn’t planned on.
2. Family situation out of town.
What if a family member suddenly got sick or someone passed away, and it was imperative for you to get there? Could you afford the cost of a last minute trip, even if you have a credit card? What if it was incumbent upon you to help pay for medical services? Or what if you got there, the family member didn’t survive, and now you have to stay there for upwards of a week or more; what would your financial situation be like?
Family emergencies come up all the time. Children get hurt; family members get sick. There’s no way to immediately deal with serious medical issues, but if something only needed a visit to an outpatient clinic and you don’t have insurance, do you have the money put away to pay for it?
3. Something fails in your house.
What could go wrong? Plumbing, appliances, windows… you name it, something could happen to it, and none of it is inexpensive. Even if it’s not your fault and someone else has to pay for it eventually, you might have to find the money to take care of something now and try to get your money after the fact. What if the situation was bad enough that you had to leave your house and stay in a hotel? How long could you afford that, and could you afford food and clothing if it was that critical?
Luckily, many people have some kind of housing insurance. However, most people also have some type of deductible. If an independent contractor had to come to the house and wanted your portion of the payment up front, would you have the money to pay them without hurting your budget?
4. Job loss. Many of us saw what happened between December 2008 through the end of 2010. Many more of us saw what happened during the pandemic. Millions of people had to stay home; some lost their jobs, and a lot of them had problems finding new work. Unemployment only lasts so long, and the amount it pays is way less than what anyone who has to go on it needs. How long could you survive on that and whatever you’ve saved, if anything?
We hope against hope that any of these things do happen to you but odds are that somewhere along the line you’re probably going to have to face one of these. Will you be ready because you’ve budgeted or saved for it?
This is why the first article we put out on this blog was about budgeting. It’s essential that everyone knows how much they’re bringing home, how much they need to pay their bills, and how much is left over. With the leftover money many people use it to go out and buy things they want without much consideration of putting some of it away somewhere.
Things happen to everyone, and without extra money being put away, it could be scary and daunting when it comes to your financial security. A few years ago we posted an article titled 16 Tips To Relieve Finance Stress. It’s a good time to revisit it. Not only does it give tips for paying down debt, it also gives a few tips on how to start putting money away in the house for emergencies. Depending on how you do it, you could end up with a few hundred dollars or more. It won’t take care of everything that might pop up unless you continue to let it grow, but it’ll certainly be enough to buy food or put gas in your car.
It’s something to think about; wouldn’t you agree?