How to Prepare for Life Events and Be Sure You Can Pay Your Bills

We often like to tell ourselves that we have everything all figured out and that we’re prepared to weather any storm that may come our way. But the truth is that unpredictable life events can throw a wrench into even the best-laid plans.

The average American household only has $8,863 in savings at any given time. So with the cost of living such as it is, any significant time spent out of work could become a financial disaster.

To make sure you can pay your bills and keep your head above water, here are some key steps you should take to prepare for life events.

Contact Your Creditors

Even at the best of times, credit card debt or a past-due mortgage can be a financial albatross around your neck. And in a financial crunch, debt can be devastating.

This is why should you ever find yourself in such a situation, you want to already have a plan in place for how you’ll deal with it. And a major component of that plan should involve contacting your creditors.

Contrary to public perception, most creditors don’t want to financially ruin their customers. They don’t gain anything from you defaulting on your obligations. So if you approach them with a reasonable explanation of your situation, they’ll be more than happy to work with you and find a solution.

Part of this plan should involve having a workable budget for your regular expenses, as well as estimates for how much relief you’ll need while out of work.

Explore Other Sources of Income

One of the best things that you can do to ensure your security in any contingency is to cultivate other income streams outside of your 9-to-5. Even if you are eligible for unemployment benefits, it can often take weeks before you receive your first payments. Having some source of emergency cash in the interim can save you from burning through your savings.

Working side hustles or gigs is a popular solution, so starting now to cultivate in-demand skills is a great way to prepare for that now. Having passive income streams like investments is even better. In either case, the sooner you start preparing, the better your position will be should the need for them arise.

Look at Ways Insurance Can Help

How insurance fits into the equation is often situational. Car insurance will be a factor if you experience an auto accident, renter’s or homeowner’s insurance may help mitigate property damage or loss, and so on.

One option you can explore is getting a plan through an income insurance company. The way income insurance plans work is that if you find yourself out of work, they’ll be there to make sure that you’re still receiving a regular cash flow. Think of it like private unemployment insurance.

Life Events Can Be Unpredictable, But Your Income Shouldn’t Be

As Ben Franklin once put it, “it’s easy to see, but hard to foresee.” Of course, you don’t want to live your life in fear of whatever unpredictable life events that might pop up. But it is prudent to take reasonable steps to prepare for an emergency.

And these steps are only a few examples of ways you can make sure you’re prepared for the future. For more on how to ensure you have the financial security for anything life can throw at you, be sure to keep up with our latest financial news and guides.