Ready for Anything: Surviving the Most Common Financial Emergencies

Life can be full of unpredictable events as well as those things that you plan carefully for over a number of years. The problem for a lot of us is that when we get blindsided by an unforeseen event it can often throw your finances into chaos.

If you want to avoid this sort of scenario and be more prepared for unexpected financial emergencies, there are a few strategies and tips you can follow so that are ready and able to cope.

Here is a look at some of the events that could quickly turn your finances upside down, from unexpected medical expenses and how to avoid the pain of paying for your treatment, to finding a way to cope with losing your income, plus some insights on investing your money.

A turn for the worse

It is all too easy to drift along in your younger years without worrying about your health and therefore avoid taking out a health insurance policy that gives you comprehensive coverage.

Even as you get older, if you take a medical and everything seems to be ok it is tempting to dismiss the prospect of a huge medical bill as something that is unlikely to happen to you.

It goes without saying that your life can change in an instant if you suffer an accident or encounter a medical situation that you didn’t see on the horizon. Health care is expensive and it is unlikely to get any cheaper in the future, so a sudden medical emergency could leave you painfully exposed from a financial point of view.

Depending on how much you need to find in a hurry you might look for a short-term solution and look for loan information here.

But a good strategy so that you know you are covered for a medical emergency would be to make sure you get adequate health insurance cover, which should then take care of those unexpected medical expenses.

Pink slip pain

If you are on the payroll somewhere you might just get to a point in your career where you don’t even think about a situation where you lose your job but if the worse happens, you could find your financial security can quickly evaporate when you are fired or made redundant.

None of us wants to think about the prospect of losing our job but what is probably more damaging than suddenly finding yourself out of work is when you haven’t made any provisions to cope with that sort of financial emergency.

It is always a good idea to try and set aside a sum of money that is equivalent to somewhere between three and six months of your monthly income.

If you can have this sort of financial buffer ready to use when you unexpectedly lose your job, it will give you some breathing space so you can cope with your bills while you find another source of income.

Having an emergency fund will also allow you to focus on getting another job rather that also stressing over how you are going to keep your finances afloat with no income.

No capital growth

If you do the sensible thing and invest some of your money you will obviously hope and maybe even expect to see your capital grow in size over a period of time.

Unfortunately not all investment options are a path to wealth and you may well find that some of your investment decisions could even see you lose some your capital rather than making gains.

Investing in stocks and other financial products always carries an element of risk and you have to be prepared to take the rough with the smooth to a certain extent.

Even investing in real estate is not always a one-way ticket to greater wealth, so the fundamental point to take on board is that it is often a good idea to spread your risk across a number of different investment products and vehicles.

If you put all your spare money into one specific fund or stock you could leave yourself too exposed, so maybe consider trying to create a more balanced portfolio and if you are unsure how to do this, think about the idea of using an investment professional to guide you.

You might not think that suffering some bad investments is as much of a financial emergency as some other situations, but the same principle applies, it is always a good idea to have a backup plan for when you need it.

Harry Bryan shares his personal finance tips around the web. Working as a personal finance consultant, Harry enjoys motorsports and pub lunches on his free weekends.