Preparing for the Unexpected

Life is full of surprises. Thankfully, most of those surprises are of the happy kind—finding your dream home, expanding your family, or inheriting a fortune from the long-lost uncle you didn’t know you had. But what about life’s more difficult curveballs? Things like losing a job, having a car break down, being hit with unexpected home repair bills, suffering through a market downturn, or even living through a global pandemic can be devastating.

While it’s not possible to avoid these situations entirely, taking some steps to protect yourself financially can eliminate many of the headaches and hardships associated with emergencies.

Budgeting

The key to financial wellness is creating—and sticking to—a budget. A budget is a map that will guide you on your day-to-day financial journey. It will help you make sure you have enough money to meet your financial obligations and can help you save money over a long period of time.

By living within your means through the use of a detailed budget, you’ll avoid accruing unnecessary debt. That way, when the unexpected does occur, you won’t have to worry about a large monthly debt payments, allowing you to focus on the situation at hand.  

Creating a budget can also help you avoid emergency situations. For example, if you know there’s a large expense on the horizon, like replacing an aging furnace, putting on a new roof, or buying a new vehicle, a budget can help you create a “sinking fund” to pay for those expenses. To create a sinking fund, estimate the total amount your large upcoming expenses, and divide up the total cost monthly, or even bi-weekly. By saving that amount each month, or every two weeks, you’ll be ready to pay for it when the time comes.

Emergency Funds

There’s no better way to prepare for the unexpected than with an emergency fund. Without an emergency fund, small expenses can push even the most budget-conscious people over the edge, tightening finances for weeks, or even months. But with an emergency fund, those expenses change from hair-on-fire emergencies to simple inconveniences.

There’s no “right” amount to have in an emergency fund. Some people choose to keep $1,000 in case of a small emergency, while others choose to save 3-6 months of income for more significant unexpected events, like the sudden loss of a job. It comes down to your appetite for risk, your broader financial picture, and how much you can comfortably save in any given month.

When you choose a goal amount, use our savings calculator to create a customized savings plan.

Insurance

Insurance is a product specifically made for the unexpected. There are many different types of insurance, including life insurance, health insurance, long-term care insurance, and more.

Life insurance is your best protection against the unexpected. In the event of a tragedy, life insurance will help your loved ones cover funeral costs, meet ongoing living expenses, and pay off outstanding debt. Life insurance can also help those who matter most to you meet their future financial needs, like education or retirement.

Health insurance can protect you against the high cost of medical care, in both routine and emergency situations. Good health insurance can alleviate the cost of prescription medications, procedures and surgery, and emergency room visits. People with health insurance often visit the doctor more regularly than the non-insured, which can help to identify and correct future health problems.

The costs of long-term care services are increasing and continue to pose a serious threat to anyone seeking to preserve their assets. No matter the scenario—private nursing home, assisted living facility, home healthcare—a hefty budget is typically required. It's advantageous for you to begin planning ahead for your long-term care needs with the proper insurance.

If you’re wondering what insurance is right for you, we can help. We offer insurance solutions for every need.

Preparing for the unexpected isn’t always straightforward. It takes a comprehensive, personalized approach. Learn more about how our private banking service can serve as a building block to a customized banking and financial management plan.