A job loss, an illness or an unexpected expense are not things we typically like to think about. Having a plan in
place can help reduce your anxiety and protect you financially when the unexpected happens.
In these times of increased uncertainty, there has never been a better time to make sure you are prepared for unexpected
financial costs. Setting up a rainy day fund, budgeting for home repairs and maintaining appropriate types of insurance
are all steps you can take to insulate yourself from financial surprises.
Rainy Day Fund: Most of us never expect to lose our job, but in the current environment this has become a reality for
millions of people. Set up a rainy day fund with 3-9 months of savings in order to cover living expenses. If you don’t have
enough savings now, allocate an affordable portion of your monthly earnings to build up your fund. Make sure your rainy
day fund is in a highly liquid investment (high interest savings or money market account) and separate from your retirement and investment accounts.
Home Repairs: While home ownership may be rewarding, it can also come with costly surprises. Unfortunately, when
the unexpected happens costs are typically in the thousands, if not tens of thousands. Experts recommend setting
aside 1-3% of your home’s value on an annual basis in order to have a fund ready for routine and unexpected maintenance. In addition, regardless of your personal financial situation you should maintain an appropriate amount of homeowners or renters insurance.
Health Expenses: If health insurance isn’t readily available through your employer, it can be tempting to ignore this added expense. The reality is that one major health issue could be financially devastating. There are numerous private plans
available in the health insurance marketplace. Many individual states now also offer exchanges to facilitate the purchase
of affordable health insurance.
Disability: A prolonged illness or disability can result in significant lost wages if you are unable to return to work. Short-term
and long-term disability insurance can provide a safety net to replace lost wages in the event you have a serious illness.
Many employers offer disability insurance as part of their benefits package. If not, there are ample private options available.
Maintain Credit Availability: Even with the best planning, we can still find ourselves in an emergency situation where we
need quick access to funds. Having credit available provides a vital backstop if no cash options are readily available. Just
remember to pay down this debt as quickly as possible once you get back on your feet financially
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no
assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including
possible loss of principal.
This material was prepared by LPL Financial