You might think that you do a pretty good job of handling your family’s budget. But what happens when an emergency comes up that requires a substantial amount of money to fix? That’s where you have to have some preparations done in advance so that you have a plan for sticking with your budget while also being able to afford this additional expense.
There are many different categories where these emergencies would come from. It might be that a family member has a medical issue. Perhaps someone got caught in a downward spiral of credit card debt. Maybe a primary vehicle broke down, and a new one has to be purchased. Or, there may even be a situation where a family member ends up in jail, and you have to figure out how to pay for bail or lawyers’ fees.
One of the worst expenses that can be incurred as a result of the family emergency is if someone falls ill with a medical emergency. These medical emergency funds might be required to help a family member pay for cancer treatment or put them into a hospital to handle conditions associated with a stroke. Even with good health care insurance, it can cost thousands if not tens of thousands of dollars to treat a family member.
Credit Card Debt
What happens when a family member falls into terrible credit card debt? They may have to borrow money from family members, or they may have to declare bankruptcy, depending on the situation. The reason that it’s a family emergency if someone goes into this kind of debt is that people can lose cars, houses, and even jobs because of all of the related consequences. It’s much better not to get into debt in the first place than have to try to figure out how to deal with it later.
What happens when a family member loses access to their primary vehicle? Maybe they got in a car accident. Perhaps they have to take the car in to repair it because of a malfunction. With that in mind, it’s important to know the total cost of a vehicle so that you can figure out if it’s worth it to put money into this primary way of transportation or if you should go for rental for a while, or what your other viable options are going to be.
What happens if one of your family members ends up in jail? Who is going to be responsible for posting bail? Who is going to pay lawyer fees? Depending on the type of crime that the court case is about, legal fees can be extraordinary, and there are even many cases where families will go bankrupt trying to defend against prosecution.