One of the worst problems with a crisis is still dealing with the other details of life. Ensure that your money matters are covered, so if an emergency hits… you do not have to worry about the finances.
The following is a list of key things to do ahead of time, before disaster strikes.
1. Create an emergency savings. How much you will set aside depends on many factors, but most experts agree that three months of your income is the minimum with six months of income the preferred. It is critical that this savings is in a liquid account that will not fluctuate with the market. The best type of account is a simple savings account or a money market savings account at your local bank.
2. Have a life insurance policy and a will. Be sure to have enough life insurance as well as a policy for both parents (even if one does not work). A stay-at-home parent still needs life insurance, as her job of caretaker is a cost savings move. Make sure you have enough by determining the yearly costs of taking care of your kids, minus any other assets and social security. Then base that on the age of your children.
3. Get a long-term disability insurance policy. Short-term disability insurance is not as necessary as your emergency savings should cover it. However, any sort of permanent long-term disability that prevents you from working could be a serious event. Make sure you are covered.
4. Have an emergency credit line. Try to get one with the lowest interest you can find, but you want a backup line that is ready if needed. It is also wise to have one backup credit card too… if you are the type to have only one.
5. Have an emergency folder. In this folder, keep a copy of all your policies, your wills, and any other important people or phone numbers. Write a letter to the people in your life who would help you in an emergency, in case you aren’t there to actually speak to them. Keep it all in one place, so it is easy to find.
Do you have any additional tips? Please submit them in the comment box below!
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