I've often been told that it's impossible to be overly prepared for financial hardships, and now that we are homeowners I've decided to take that advice to heart. We've always been good at meeting our monthly obligations, but now I have to be extra diligent. To do this, I looked at several of the most common financial disasters people face, and formed a plan to deal with them. These are the three financial disasters I'm preparing my family's finances for.
Before the economic crisis began in 2008, many people were confident that their jobs were secure; however, after the crisis reached its peak it was clear no one's job was safe. My husband's employer was among the thousands of companies that purged a large number of their employees. In fact, they cut their staff by nearly half. Luckily, my husband held on to his job, but the whole thing taught us a lesson.
We've taken a few steps to prepare our finances just in case something was to happen to my husband's job, and those steps include:
- Calculating our minimum livable wage: We added all our expenses together, added taxes, and divided 2080, which is the total number of hours someone works in a year based on a 40 hour week. We found that our minimum livable wage is $13.41 an hour.
- Eliminating monthly bills: We started by paying off a credit card, and are working toward paying of our auto loan.
- Saving more money: We cut our monthly entertainment budget by $50 and we are saving that money just in case of job loss.
There isn't a way to truly prepare for major illnesses other than to have health insurance, which we have; however, we can prepare for the less serious, more common illnesses like colds and the flu. To get started, we double-checked the number of sick days my husband has remaining for the year and stocked our medicine cabinet with medication. I've also begun budgeting $100 a month for medical co-pays and prescription costs.
It seems a new natural disaster is featured on our local news station every day. I'm fairly certain that they are becoming more frequent, and with that I'm starting to pay more attention, but it makes me nervous. Like job loss and an illness there is no way to know when a natural disaster will strike so preparing is a must. We did this by creating a list of our belongings, gathering important financial documents, and keeping cash on hand.
Although I can't be sure when or if my family will ever face any of these disasters, I'm hopeful my preparations will make facing them easier.
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