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4 emergency expenses to plan for in 2021

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Here’s why it’s beneficial to increase your cash reserves.

You’ve probably heard over and over again that it’s important to have money in a savings account. But if you’ve never been hit with an unexpected bill, you might not feel so compelled to spend that extra cash.

Here’s the thing, though: Life has a funny way of costing us more than we expected. With that in mind, here are some emergency expenses you might encounter during the year.

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1. Home repairs

When you’re a homeowner, there’s always the possibility that something could go wrong, whether it’s a minor issue like a leaking sink or a major issue like a leaky roof. Home repairs can be extremely expensive and you can’t always handle them yourself. As such, it is essential to have the cash on hand to hire a professional to take care of a problem as soon as it arises. Plus, don’t assume you won’t have expensive repairs just because your home is newer. Problems can arise with newly built homes as well, and although many of these homes have a warranty that covers your first year, after that you’ll be on your own.

2. Car repairs

If you own a car, you probably rely on it for getting to work, shopping, and, well, running. So, if a problem arises with your vehicle, it is imperative that you resolve it immediately. And unless you’re a mechanic or have comparable skills, you’ll need to pay for your car repairs. Remember, it isn’t always important that you do a great job in auto maintenance. You never know when you might run over a nail in the road and need a new tire – and that’s a relatively small expense. So be sure to free up funds to cover these costs.

3. Medical bills

You can be a perfectly healthy person to have an accident or get injured and land in the ER with a pile of bills. Even people with decent health insurance can find themselves forced to pay expensive medical bills, so you need to have emergency cash on hand in case this happens. After all, when trying to recover from a health related episode the last thing you need is the stress of how you’re going to pay.

4. Job loss

You never know when you might lose your job, and unfortunately in today’s economy, that’s an even more distinct possibility. While those who lose their jobs through no fault of their own are usually entitled to unemployment benefits, these benefits may not entirely replace your paycheck. That’s why you need cash in the bank to make sure you can meet your bills while you look for work.

It’s more fun to spend money than it is to save it, but the reality is you never know when an emergency fund will come in handy. At the very least, you should aim to put enough money in the bank to cover three months of living expenses. And for better protection, push yourself in to save six months. Having that cash on hand could turn an otherwise dire situation into a manageable one, so do your part to buy yourself that protection.