Having an emergency fund is not so uncommon today. Most people meticulously save for things like holidays, retirement and a special personal treat every now and then. What they forget, however, is that unexpected expenses can easily break their bank account and gulp a huge portion of their savings.
Personal finance experts have estimated that it is best to have between 6 to 12 months of income saved for unforeseen expenses. A research by Bankrate, however, has found that only 40% of the people have so much money set aside for emergency even though nearly 50% of them reported that they had at least one unexpected expense in the past one year.
Luckily, unforeseen situations that require unexpected expenses are quite foreseeable. There are five main emergency financial situations that occur most frequently than all the other.
Insurance
Insurance rates tend to increase quite unexpectedly. In addition to that, sometimes insurance does not cover everything. To avoid such unpleasant surprises, carefully read your policy again on your own and then with an agent. If there are points that the insurance does not cover, prepare for them in advance by saving a few dollars aside.
