You work hard for your earnings, and when a crisis happens, you don’t want to see it all go down the drain. Whether you find yourself holding a bad business investment or suddenly without a job, you should take steps now to ensure you have the financial means to support yourself in an emergency. Consider these three examples of emergencies so you can start building financial safeguards now.
1. Your Company’s Earnings Warrant Lay-Offs
Your believed your job was recession-proof. You never worried about talks of lay-offs. However, the call to the boss’s office changed that belief. Once the shock of a dismissal wears off, you may start panicking. In the current economic and political climates, start prepping for the possibility of a job loss. Save as much of your disposable income as possible. The recommendation is to have at least three months of living expenses stashed for a rainy day.
2. You Get in a Serious Car Accident
As any car accident lawyer Columbia MD can tell you, the severity with which you can get hurt in a crash varies. If you wind up with serious injuries, your financial picture may darken. You may not return to work for months, and even when then, it may be in a different position. While the hope is money from the auto insurance and your medical insurance will cover medical expenses, what about the lost income? A personal injury lawsuit may help, but that takes time. You need to have extra money stashed away for this purpose.
3. You Find Out You Owe Back Taxes
A letter from the IRS may send your hair on edge, and with good reason. While you only have three years to dispute a mistake on your tax return, the IRS can recover money from you for up to 10 years. If you owe the government money, you may get your wages garnished or have to liquidate assets to pay.
Prepare for an emergency now. If you don’t, and something happens to decrease your income, you may have to face difficult choices.