[{"@context":"https:\/\/schema.org\/","@type":"Article","@id":"https:\/\/moneydoneright.com\/personal-finance\/saving-and-budgeting\/planning-for-the-unexpected-in-life\/#Article","mainEntityOfPage":"https:\/\/moneydoneright.com\/personal-finance\/saving-and-budgeting\/planning-for-the-unexpected-in-life\/","headline":"Planning for the Unexpected at Work, in Marriage, and in Life","name":"Planning for the Unexpected at Work, in Marriage, and in Life","description":"It\u2019s impossible to predict your financial future, so it\u2019s important to protect yourself from...","datePublished":"2019-09-10","dateModified":"2023-04-27","author":{"@type":"Person","@id":"https:\/\/moneydoneright.com\/author\/logan-allec\/#Person","name":"Logan Allec, CPA","url":"https:\/\/moneydoneright.com\/author\/logan-allec\/","identifier":4,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/6e74dd0453a5871d1dcfde6d40d9494765ca8bfdb01927cefee4564d4bee9075?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Money Done Right","logo":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/Money-Done-Right-Personal-Finance-and-Investing-Blog.png","width":488,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2019\/09\/planning-for-unexpected.jpg","url":"https:\/\/moneydoneright.com\/wp-content\/uploads\/2019\/09\/planning-for-unexpected.jpg","height":960,"width":1440},"url":"https:\/\/moneydoneright.com\/personal-finance\/saving-and-budgeting\/planning-for-the-unexpected-in-life\/","about":["Saving Money"],"wordCount":2313,"keywords":["schema"],"articleBody":"It\u2019s impossible to predict your financial future, so it\u2019s important to protect yourself from unexpected events including job loss, illness and injury, and even death. These circumstances and more can completely change your financial situation in a single day, especially if you haven\u2019t prepared a safety net.The actions you take today can help you gain a more secure financial position in the future. These are some of the most effective ways of planning for the unexpected and ensuring that you and your family can recover from a worst-case financial scenario.Table of ContentsTogglePlanning for the Unexpected at WorkPlanning for the Unexpected in MarriagePlanning for the Unexpected in LifePlanning for the Unexpected at WorkLosing your job can be a major financial burden, especially if you don\u2019t have savings to draw on until you\u2019re back on your feet. Here are some tips on how to protect yourself from job loss.Create an Emergency FundContributing toward an emergency fund is a great first step toward financial security, and even a small percentage of your paycheck can make a big difference. Regardless of your current financial situation, you should always have an emergency fund to cover any unexpected expenses.Building an emergency fund can take months or even years, but today is always the best time to start. It might be tough to budget some of your paycheck for savings each month, but this will become easier as you develop better spending and saving habits.This must be a top priority.If you\u2019re having trouble keeping yourself disciplined, make an emergency fund your top financial priority. Set an amount to contribute out of each paycheck and make that the first thing you do before you start spending money on anything else.On the other hand, you might need to focus on paying off debts or working on other financial obligations before you can start putting more money into your emergency fund. Whatever you can contribute this month will make a real difference, even if it takes time to get to the number you want.Have at least 3 months\u2019 worth of expenses.Depending on how much cash you\u2019re able to move into your emergency fund, it could take you anywhere from a few months to over a year to feel comfortable. In general, three months\u2019 worth of expenses is a good goal, giving you the money you need to live comfortably between jobs or cover any other unexpected bills.Once you have expenses for three months in a saving account, you can start prioritizing other goals without risking your security. That said, you should continue contributing to the fund whenever possible\u2014three months is a good starting point, but life doesn\u2019t always revolve around your financial planning.Don\u2019t feel discouraged if you aren\u2019t able to reach your target as quickly as you hoped\u2014we all have financial ups and downs, and it\u2019s important to stay committed to your goals even when things aren\u2019t going perfectly.Make a BudgetIt\u2019s easy to start budgeting once you\u2019re working toward an emergency fund, and keeping track of your expenses will help you identify and correct problematic spending habits. You\u2019ll also be able to calculate how much you spend each month in order to determine the number to target for your emergency fund.Use technology.While there\u2019s nothing wrong with budgeting by hand, there are also a number of helpful mobile applications that facilitate the process and help you reach your financial goals.Apps like Mint connect directly to your bank account to automatically import and categorize transactions.As you work on your new budget, include the amount you want to set aside for your emergency fund each month. If you want to build $6,000 in savings over the next year, for example, take $500 out of your income each month, then budget your other expenses with the rest.Balance is key.It may take some time to strike a balance between saving for your emergency fund and living comfortably, so don\u2019t worry if you don\u2019t get it right in the first month or two.It\u2019s important to be flexible with your savings goals and adapt your approach if things aren\u2019t going as you planned.Less than one-third of the US keeps a budget, and simply being more aware of where your money goes each month will go a long way toward saving more for your emergency fund.Planning for the Unexpected in MarriageWhile we all hope that our marriage will last a lifetime, the reality is that half of all marriages end in divorce, and there\u2019s no way to predict your relationship trajectory in advance.Divorce can be an incredibly difficult time both financially and emotionally, but you can protect yourself and your assets by planning ahead.Enter a Prenuptial AgreementPrenups are often a controversial topic, but they make things easier for both sides and usually make the divorce process less messy. Couples are more likely to fight over money and assets without a prenuptial agreement, so it\u2019s easy to see why they\u2019re becoming more popular.You might think of prenups as something for only the extremely wealthy, but they provide important protections regardless of your financial situation. If your partner has significant debts, for example, a prenuptial agreement can ensure that you aren\u2019t left responsible for them after a divorce.Similarly, prenups can protect any assets you bring into the marriage from being divided during the divorce process. What exactly should go in your prenuptial agreement depends on your individual and shared financial goals, so it\u2019s a good opportunity to communicate about anything important before you get married.Prenuptial agreements can be voided if they\u2019re found to be unfair, especially if they were brought up just before the wedding date. It\u2019s important to talk openly to your fianc\u00e9(e) well in advance of the wedding to give the two of you time to work on an agreement that you\u2019re both happy with.Maintain Separate FinancesYou\u2019ll probably have at least some joint accounts during marriage, but that doesn\u2019t mean you can\u2019t also keep your own accounts and credit cards. Having your own savings will go a long way toward living more comfortably through the divorce process, when most of your joint money will be tied up.Separate accounts are also easier to keep after a divorce, whereas you risk losing some of whatever you\u2019ve contributed to joint accounts. Keeping your own accounts simplifies the process and ensures that the money remains your own.Freeze Joint AccountsYou might not need to freeze your accounts if you\u2019re going through a relatively amicable divorce, but the last thing you want is for your partner to withdraw the money before you even get to arbitration. Freezing joint accounts protects your money and forces both sides to wait for a legally binding decision.Of course, you probably won\u2019t be able to freeze these accounts if you don\u2019t have your own savings and cards to fall back on. That\u2019s why it\u2019s so important to keep separate accounts throughout the marriage rather than being dependent on joint assets in the event of a divorce.Avoid Unnecessary ExpensesIt\u2019s generally best to put as much as you can toward loans and other debts, but you should pay as little as possible on joint debts until the divorce is finalized. If there\u2019s a chance that you might not be found responsible, there\u2019s no reason to make more than the minimum payment.Similarly, you should stop investing in anything that might end up going to your spouse. Cancel any home improvement projects, get your own cell phone plan, and take your partner off your car insurance.Planning for the Unexpected in LifeBeyond job loss and divorce, there are a wide range of other circumstances that can affect your finances and those of people close to you.Illness, injury, and disability can substantially change your earning potential or force you to take extended time off of work.Your death can also put your family in a very difficult financial situation, especially if you don\u2019t prepare for these events in advance.Life InsuranceLike an emergency fund, your life insurance policy is an inexpensive way to give you and your family financial protection no matter what happens.Life insurance isn\u2019t something many of us think about when we\u2019re young and healthy, but coverage often grows as you stay on the same plan, and there\u2019s no way to predict when the unexpected will happen. It can be more difficult to acquire coverage when you\u2019re older or have health problems, so it\u2019s always best to look for life insurance before you need it.In addition to providing a safety net for your family after your death, many life insurance policies pay for common costs like funeral and medical expenses that aren\u2019t covered by other insurance. Life insurance is the best way to protect your family in a worst-case scenario..Term vs. Permanent Life InsuranceLife insurance comes in two general categories: term and permanent. Term life insurance provides protection for the length of the term, after which you\u2019ll need to renew your coverage, move to a permanent plan, or stop being insured.You\u2019ll hopefully never need to use your term life insurance coverage, but the protection it provides is extremely important. Costs related to death can be extremely high, not to mention the difficulties your family will experience living without your income.Permanent life insurance covers you for your entire life but is usually more expensive. It also allows you to grow your coverage as you make contributions over time, while term life insurance plans provide a fixed amount for the duration of the policy.Term life insurance is in general much less expensive than permanent life insurance. You are only paying for the death benefit with term life insurance and the policy is good for only the specified period of time. Permanent life insurance is generally more expensive as coverage remains throughout the life of the insured and there is potential for cash value build up and additional benefits during the life of the insured.Getting Life InsuranceIn the old days, getting life insurance meant spending a lot of time filling out forms and perhaps even seeing a doctor for a medical exam. (Even now, people can still opt for this process if they have special needs.)Today we have companies that leverage technology to make sure that the process of obtaining life insurance is as easy as possible.And one of the best companies doing this today is Bestow.If term life insurance is what’s best for you, Bestow offers a two-year plan that\u2019s intended as a stopgap along with ten- and twenty-year term plans to give you long-term coverage in case of unexpected death.Bestow makes getting insurance easier than ever, allowing you to apply by simply answering a few questions and selecting the plan that\u2019s right for you. You\u2019ll be able to find coverage in just a few minutes without the medical exam or other inconveniences that may be involved with other life insurance providers.Bestow offers affordable coverage options that should fit into any budget, making life insurance an easy decision for anyone with family dependent on their finances. Like an emergency fund, your life insurance policy is a cheap way to give you and your family financial security no matter what happens.Disability InsuranceLife insurance protects your family in the event of your death, but it won\u2019t cover anything if you\u2019re injured or otherwise disabled in a way that prevents you from working. Disability insurance is a critical form of protection for both you and your loved ones, especially if you work in a field with a high risk of injury.Some businesses provide disability insurance to their employees, so you should ask someone in your HR department if you\u2019re not sure about your company\u2019s policy. Even if you do have some coverage, there\u2019s a good chance that it won\u2019t be enough to support you and your family in the event of a long-term injury or illness.Like life insurance, disability insurance isn\u2019t something we usually think about before it\u2019s too late. You might think that disability isn\u2019t a major risk, but one-third of us will be disabled for at least 90 days at some point in our career. Without disability insurance, you won\u2019t be able to replace that lost income.You should be able to find disability insurance that covers around 50 to 70 percent of your current income depending on your financial needs. With both disability and life insurance protection, you won\u2019t have to worry about any unexpected circumstances threatening you or your family\u2019s financial future.We hope that you\u2019ll never need any of the tips on this list, but it\u2019s much better to be safe than sorry when it comes to your financial security. These ideas will help you prepare for whatever happens and make sure you have the money you need to get through any financial challenges.Disclosure: This post was made in paid partnership with Bestow. Neither Bestow nor North American Company for Life and Health Insurance were involved in the preparation of the information in this article. The opinions and ideas expressed in the article are those of the author(s) and are not promoted or endorsed by Bestow or North American. You should always seek professional advice before making a financial decision. Money Done Right will not be compensated for life insurance purchases but may receive affiliate fees."},{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"Personal Finance","item":"https:\/\/moneydoneright.com\/personal-finance\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"Saving And Budgeting","item":"https:\/\/moneydoneright.com\/personal-finance\/\/saving-and-budgeting\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"Planning for the Unexpected at Work, in Marriage, and in Life","item":"https:\/\/moneydoneright.com\/personal-finance\/saving-and-budgeting\/planning-for-the-unexpected-in-life\/#breadcrumbitem"}]}]