The cost of an emergency is far more than most people have got saved, a new report by GoBankingRates.com has found.
Using Census Bureau, FEMA, HomeAdvisor, Insurance.com, and other data, the personal finance site unveiled calculations for how much different emergencies might actually cost the average person.
According to the research, job loss would cost $28,824 (based on six months of median income); a Hurricane or tornado would cost $7,232 (based on the average national average homeowners pay for the cost for repairs; out-of-pocket charges vary significantly based on your insurance provider). If you were to experience a flood, it could cost you $26,807 (based on cost to your home and personal property, taking into account that most homeowners’ insurance policies don’t cover flood); if you were to be involved in an earthquake you would endure an expense of $4,529 (based on the average national average homeowners pay for the cost for repairs; out-of-pocket charges vary significantly based on your insurance provider). A medical emergency could cost you $1,322 (based on the average out-of-pocket cost); a car accident could be $775 (based on the average out-of-pocket cost); the sudden death of a loved one would put you $10,833 out of pocket (based on funeral-related expenses), and a fire would cost you $12,635 (based on the average national average homeowners pay for the cost for repairs; out-of-pocket charges vary significantly based on your insurance provider)
Obviously, the cost of these emergencies can vary widely and not all of them will impact everyone. However, statistically, an unexpected cost is likely to arise. According to an American Express survey, nearly half of Americans have been hit with an unexpected charge in the past year, with car troubles, health issues, and home issues being the most prevalent.
Most people simply can’t afford an unexpected expense as according to Bankrate, 23% of Americans have no savings put away in case of an emergency. Another 22% have less than three months of income saved, and 18% have 3-5 months. According to the survey, just 29% say they have six months or more.
There is of course no way of knowing the future or predicting an emergency, however it is good to be prepared so that should unfortunate events occur, the financial element is the least of your worries. Saving 3-6 months income should be adequate for most people, if you can do more, then even better.
There are also preventative measures you can take such as dilapidation surveys, ongoing maintenance to your home, take out good insurance for life, home and travel, conduct risk assessments and just be aware and ahead of situations that may arise. For example, if you live in an area that is likely or known to flood then take precautions, check your fire and smoke alarms are working regularly and check the weather for storms.
Image Credit: Pexels