Handling the Unexpected

While we can't predict what will happen in our future, we can plan ahead for the unexpected. During unprecedented times such as the coronavirus (COVID-19) pandemic, many are worried about their health and finances. Financial security is essential to successfully managing major life events, and that means anticipating how unexpected expenses such as a job loss, an injury or the death of a spouse may impact our finances.

Unexpected Expenses

Whether it's a job loss due to a natural disaster, a pandemic like COVID-19, a car transmission repair or a leaky roof, these kinds of unexpected expenses will likely impact your budget. One way to be more prepared for such incidentals is to start setting money aside. Put at least 10–15 percent of your average monthly income into savings automatically. You can adjust the percentage as you get a more accurate picture of what you're actually spending each year.

Another way to prepare for the unexpected is by saving for what is commonly known as an emergency fund. One way to ensure that you build up a reserve of emergency funds is to include it in your monthly budget. Set a portion of your income aside every month, no matter how small the amount.

Unlike with retirement funds, you'll want to have easy access to your emergency funds. Hopefully you will never need it, but if you do, you'll be glad it's there.