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4 Financial Pitfalls and How To Overcome Them
If you’re like me, you always have financial worries in the back of your mind; your future being the most worrying financial topic of all!
There are just so many things that can negatively impact your finances! And many of them, good or bad, are completely unexpected. Whether you’re blessed with a baby or cursed with a life-altering injury, we all need to plan for these possible situations and know how to deal if they come up.
1. Injured and Out of Action
The first situation you need to consider would be if you happened to be injured in an accident. Most people think accidents won’t happen to them because they’re so careful. But what if the accident isn’t your fault at all? What if it’s the result of someone else being careless?
Injury obviously puts a significant strain on your finances if you are unable to work. If you’re not at fault in the accident, seek advice from a reputable personal injury attorney. You may be able to claim compensation for the accident to help cover your medical bills and living expenses. A professional will also be able to advise you on your rights in terms of your salary from your employer.
2. Bill Burdens
Have you ever been overwhelmed with bills? Or gotten a totally unexpected bill? Just last month I received a bill for a dental cleaning that I thought was covered by my insurance. Turns out cleanings aren’t covered. Oops.
The best way to plan for unexpected bills is to expect that something unforeseeable will come up, even if you don’t know what that might be. So when you create your budget, add another category called “unforeseeable expenses”. You can plan to spend a flat rate every month on unforeseeable expenses, Or calculate a percentage of your total standard expenses to budget for this category.
3. Vacation Worries
Vacation should be something to look forward to, not stress over! But all too often vacation plans are made, and all you can think about is how much it’s going to cost for the flights and accommodation.
You don’t want to miss out on the fun, but you’re not in a stable position to pay for everything outright.
Here’s the thing about vacations: you know they’re going to happen, right? You might not know when or where, but you know you’ll take a vacation at some point. So always be saving for vacation! Set up a savings account and save just a little bit of each paycheck. Just 3% if that’s all you can spare.
That way you’ll always have money ready for vacations. Even an impromptu trip to Cabo!
4. Life Events
From weddings to babies, many of us get to this point in our lives and discover we aren’t really prepared for the expenses that come along with these happy events.
Make sure you plan and prepare carefully. Open up a savings account with good interest rates as soon as you can. Contribute little and often to your new account and you will soon have a cushion of savings for these important occasions.
Since we can’t plan for which specific financial pitfalls we’ll come up against (or when!), build the unexpected into your budget. Your future self will thank you.
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