Friday, September 29, 2017
15 Emergencies That Could Crush Your Bank Account
Unexpected costs are a real bummer. You work hard every day only to find that you need new brakes. Low and behold you have no money in your bank account to cover that cost. Now you are putting it on the VISA, but sadly the VISA already has a lot on it. Now that minimum monthly payment is a nasty number.
Side note: If you count remaining credit limit room as available funds, you need to be reading more of my posts! That is not your money and is very, very stupid! I know because I’ve been there!
Anyways, back to the program. When a $500 expense comes up, and it will, it shouldn’t devastate you and your bank account. Sadly, many people have little to no emergency savings.
25% of millennials have no savings, 27% of baby boomers
This leaves you dangerously close to the edge when it comes to dealing with emergencies. Credit companies thrive in a society like this, so it is no wonder that household debt levels break new records every quarter here in Canada and the US.
On average, each Canadian has $22,125 in non-mortgage debt
You might say: “I am working and doing alright, what could happen to me?” As Forrest Gump said, “S*** happens.” In this post, I am going to speak to 15 emergencies that happen all the time and how they can ruin your bank balance. I would wager at least 2 of these have happened to you.
Losing your job
This is first for a reason. Losing a job is devastating. I personally have worked for 3 different places that have gone out of business. No warning, boom, no job. I was even owed my final cheque from these places. The third time it happened to me 6 years ago I actually had some savings built up and I was fine. The first 2 happened when I was younger and broke and it took me months to finally recover. It could take you up to a year to find work again, so have some money set aside.
Starting a new job
Great news, you landed that dream job! Bad news, you have to wait 3 weeks to get your first paycheque. This could be a big problem if you are already hanging by a thread. You might have to buy new uniforms, shoes, work attire, or accessories for this new job and that will set you back as well. Your new job may also come with a pay decrease, seeing how it is your dream job. Are you ready for that?
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Work screws you in other ways
Having been in the restaurant industry in a student town, during the summer was dead for business. This left many people scrambling to pay bills as shifts were reduced and were generally slower overall. When you are at the mercy of someone else you never know when you could lose a shift. One less shift a week could mean a loss of $400-$1000 a month. Can your budget handle that?
You get sick
How many times have you gone to work sick? People do it all the time often with no regard for their co-worker’s health. Does this make you a bad person? No! All it means is that you can’t afford to miss a day of work. If taking 3 days off work to get better is not an option, you really need to focus on an emergency fund. Remember this during flu season this year.
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You get injured
I’ve seen people back at work after 2 days after breaking their leg. That is not good for you or your leg. I went back to work 1 week after being shot because I was as broke as a joke when I was younger. Getting hurt might mean months off work or months of working less. Make sure your budget can handle that.
Your child gets sick
Kids get sick all the time. They are constantly absorbing the illness of their classmates. If you had to take a week off work to tend to their illness would you be able to afford that? What if they got really sick and had to take a year to recover? That could financially bankrupt some people.
Mom and Dad, or Brother and Sister
If a family member or loved one gets sick, injured, needs end of life care, or is just in financial straits, could you afford to welcome them in? Adding another member to your household, even temporarily, could cost you extra money.
Pets
I have written to this before, but pets cost a fortune to care for. My beautiful Rottweiler had to have leg surgery when he was 1 because he was going too fast for his body to keep up. That surgery cost $1500! You don’t want to choose between your pet suffering and your bank account suffering.
Home repairs
As I’ve mentioned many times, home repairs are pricey. New roofs, siding, water heaters, filtration systems, appliances, yard tools, windows, and many other things could make a nice dent in your savings. That is if you have savings.
Cars
Your automobile is a huge drain on your pocketbook. Every other month it is like something else goes on it. A new transmission can run you a few thousand and even something as small as a new exhaust can cost hundreds. Be prepared for these routine costs.
Taxes
Did your new job take enough taxes off you this year? One sure fire way to find out is when the government sends you a bill for the balance. This becomes especially important for the self-employed who have to bank money all year to pay taxes in the spring. Make sure you understand what tax time looks like to you so you aren’t blindsided.
Someone Dies
Funerals cost a fortune. Hopefully, the loved one that dies has life insurance. (PS: Get Life Insurance!!) If they don’t you will have to front the cost. If they do, you might have to wait a few weeks for the claim to come in. Seeing how you can’t wait a few weeks to bury your loved one, you will have to put up the upfront costs. By the way, the average funeral costs $20,000, so do your family a favor and get some life insurance.
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You have to move
Your landlord has decided when your lease is up he is renting his unit out to his daughter. Work takes you to another city. A fraternity moves into the house next door. Moving can cost up to $5,000 and will make a dent in anyone’s wallet. You don’t want to turn down a great opportunity because you can’t afford to relocate.
Pregnancy
While making a baby is super fun, having one can be super expensive. Kids cost a fortune and that doesn’t even include the time you will have to take off work. You could be off work for up to 2 years on a reduced income. Not only that, when they get older everything they do is more and more costly. I used to be a little terror; I can only imagine the money my parents shelled out for me.
You find a deal
I am not talking about “buy one get one free” at Forever 21. What if you need a new bed and you see one on sale? How about that broken dryer finally goes on sale and you need to pounce on this chance. You don’t want to miss out on something you actually need because you can’t even afford that.
Emergency funds can be used for many things. The key is to save your money and not to waste it on crap. Of that list of 15 things, I have had 8 of them happen to me. I know a little extra money in my younger days would have helped greatly during those times. For many years I had to live without, even when it came to the essentials. Getting sick or hurt wasn’t an option for me. Take it from me, that is no way to live.
Thanks for tuning in this week at Budget Boss for Emergency Funds Week. We will be going live on Facebook with Six Five Interactive from Innovation Works in beautiful Downtown London, Ontario this afternoon. If you want to work on starting your own emergency fund shoot me a message at joe@budgetboss.ca or use the chat box in the right corner. Have a great weekend and Happy Saving Friends!!
“Smart financial planning – such as budgeting, saving for emergencies, and preparing for retirement – can help households enjoy better lives while weathering financial shocks.” – Ben Bernanke
Email – joe@budgetboss.ca
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