Make sure you’re prepared for a financial emergency

Even if you have a well-paying job, affordable living costs and few debts, it’s important not to take a good financial situation for granted. Here are some steps you can take to prepare yourself for a financial emergency:

1. Have an emergency fund. Financial experts recommend creating a savings account with enough money to cover six months’ worth of expenses. That way if disaster strikes, you’re prepared.

2. Have adequate insurance. It’s essential to have renter’s or homeowner’s insurance in case of disaster. It’s also a good idea to get disability insurance, which covers your expenses if you become ill or disabled and can’t work.

3. Make sure to have credit available. In a financial emergency, you may need to bill expenses to your credit cards until you’re able to pay them off. Before financial disaster occurs, however, it’s important to do your best to avoid credit card debt and pay off your outstanding balances as quickly as possible.

4. Plan how to cut expenses quickly. Examine your expenses and identify where you can cut back. In an emergency, gym memberships and TV packages can be cancelled, and money spent on eating out can be reduced or eliminated entirely.

If you prepare for an emergency now, your financial plan won’t be totally derailed if you’re faced with a debilitating illness or injury, unexpected job loss or costly damage to your home.