Sure, you save; in the financial world it’s a must. But most financial advisors will focus more on long-term investing and retirement plans, rather than give the proper emphasis on emergency planning, which for some reason always seems to get put on the back-burner.
Of course your Roth IRA is important, and so are your other investments. But all too often when something unexpected arises, most people aren’t prepared financially or logistically, which is made apparent after natural disasters, such as Typhoon Haiyan, Hurricane Sandy and and numerous other disasters, small and large, natural and financial, that no one thought would happen to them. So in the name of preparedness, below are some tips that you should take so you’re not caught off guard and ensure your retirement fund will be there to enjoy.
1) Always have cash
From disastrous storms, to the banking crisis in Cyprus, one thing to remember is most likely credit cards won’t be an option for payment and ATMs won’t be working, so as the saying goes, “cash is king.”
It’s always a good idea to have a couple hundred dollars stashed away, because if you aren’t fully prepared and need more supplies, it’ll probably be your only means of getting water, fuel and food.
2) Have an emergency kit.
Most recommendations for an emergency kit include enough food and water for no less than three days, along with tools and a first aid kit (which can be bought easily online). Emergency kits include those basic items, along with flashlights and a radio so you can still hear any news on emergency broadcasts. If you are unsure about building your own kit, you can buy one here from the Red Cross.
3) Stock up on non-perishable foods
As mentioned before, most basic emergency kits only cover three days, so if there’s a real disaster, you’re going to need to be prepared and have plenty of food and water. Canned foods are always a safe bet because they last a long time and are generally ready to eat right away (if there’s no gas or means of cooking anything), so it’s very important to take into account you may not have the luxury of being able to heat a pan or boil water, which means rice and pasta, which do store well, may not necessarily be a good option.
Plus, you can always eat the food that was bought first and keep replenishing the supply so you’re always prepared and not sitting on a decade of old canned foods covered in dust. And even if it’s not an emergency, having some food stored away can be very helpful when going through a period of unemployment and saving is even more important.
4) What does your insurance cover?
Live in an area prone to natural disasters? Know which ones might be of risk and make sure you have personal insurance to cover it; from auto, health, disability, to homeowner’s or renters insurance, it’s an absolute must because the last thing you want is to have all your hard-earned savings drained having to replace something damaged or lost because it wasn’t insured.
Also, if you’re the main provider for your family, make sure your life insurance will be enough to support them. And if you have a considerable amount of assets, looking into long-term care insurance and umbrella liability is a good idea
5) Save some for a rainy day
Not all savings in you bank have to be specifically for a disaster, because an emergency doesn’t always mean you’re safety is dire straights, it could just mean you’re unemployed and need to fall back on some cash reserves until you’re back on your feet. As the financial crisis during 2008 demonstrated in Dubai, having enough money saved to cover mortgages and loans can mean all the difference, and Globaleye can help every step along the way to make sure you’re prepared
The amount recommended for your emergency savings varies, depending on the individual’s financial situation and the stability of your income. In general, having six months of salary stashed away is a good goal to have, and focus on fulfilling that goal before paying off debt. It’s also wise to keep these funds in an insured bank or credit union, that way you can be collecting interest with no risk. That, or using a Roth IRA can suffice; traditionally it’s not used this way, however you are always able to withdraw the sum of your contributions at anytime without paying any penalty. And the latter option proves to be a great call because if there’s no need to pull out these funds early, you can simply invest more rigorously for retirement.
The bottom line, be prepared so your hard-earned money isn’t needlessly expended when it could’ve been prevented. And don’t only think in terms of a disaster, also keep in mind unexpected unemployment which could always come at the least convenient time, because your ultimate goal should be a stable and fruitful retirement with good investment returns.