How to Prepare for Unexpected Expenses
/When setting a budget you should consider unexpected expenses in addition to financial goals. Maybe you want to save build generational wealth for your kids, or take an extended solo vacation?
How do you prepare for unexpected expenses? Below are questions to help you prepare for unexpected expenses.
How Do Your Current Saving Habits Stack Up?
The way you save at the moment says a lot about the money you’ll have later on in life. Do you make it a priority to put away 5-20% of your paycheck each month? Or do you let things fall by the wayside and only save up when you remember to? If the latter sounds more like you, it might be worth setting up an automatic transfer, which can be done in any banking app. As long as some money is saved, no matter how much you can afford, you’re doing your future self a huge favor.
What Will You Need to Cover the Basics?
Calculate your mortgage/rent, food, and clothing costs. This will help you plan for today and for your future retirement. Depending on the job you hold, you may have employer-matched pension contributions or employer-matched 401(k) contributions. For example, any government employee can use a FERS retirement pension calculator to find out what they’re likely to receive when they retire.
Will You Have a Family to Care For?
As we mentioned earlier, you might have a family to think about one day. Child costs do add up. What if your child wants to further their education? What if you’d like to help them pay for a house? These are all considerations you need to make as soon as possible about your life; becoming a parent is a huge responsibility and that tends to show the most on your savings account.
Saving your money can be hard; there’s so much to spend on in the here and now! But if you think about the way you want your life to go, you’ll be much better able to determine how much you’ll need for the years ahead.
