Pessimism pays: Expecting the worst can save you money
Posted
Mar 13 2008, 07:54 AM
by
Karen Datko
This post comes from Lana Goodrich at partner blog Wise Bread.
What's the first thing people tell you when you start feeling down in the dumps? "Don't worry. Things will get better." But sometimes, being too positive is just a one-way street to being unprepared.
Here are four common worries and why dwelling on them can help you save cash.
What if I lose my job? You're right to worry. The economy is on shaky ground, and you could be fired or laid off due to any number of circumstances. Take it for granted that you're going to leave your job eventually.
This is a good time to set aside money for an emergency fund to cover at least three months' living expenses. Update your resume or portfolio so they're current and highlight your best work. Network with acquaintances and put out your feelers for similar jobs -- even if you have no intention of leaving quite yet. Being ready is the best way to bounce back.
What if I get into a horrible car accident? No one wants to think about what would happen if they were hurt or killed in an accident -- but you should. Make sure you have life and disability insurance. Write your will or establish a trust for your family and detail where all your assets should go. Establish who you'd like to have power of attorney if you ever end up in the hospital and unable to make your own decisions. Bad things happen to people of all ages. Being young is no excuse for not being prepared for an emergency.
What if my future spouse leaves me? How about a prenuptial agreement? Oh, I know what you're thinking. But really, wouldn't you rather protect your interests -- and your future spouse's -- while you're in a loving state of mind? Should you end up divorced, you don't want to spend so much time fighting over a couch that the cost of legal fees could've easily bought you another one. In the best-case scenario, you never use the prenuptial agreement. Worst-case scenario, you'll have a lot less to worry about if your marriage goes down the drain.
What if my house burns down? If you bought your house with a mortgage, you were required to purchase homeowners insurance, which covers things like damage from fire, lightning and hail. But if you're a renter, there's a good chance you may not have insurance. When you rent, the building is insured by your landlord or property-management company. If there's a fire, your landlord is responsible only for the building, not any personal property you lose. A basic renters insurance plan replaces personal property and can cost you as little as $10 a month.
So tell me, what are your financial worries and how do you prepare for them?
Other articles of interest at Wise Bread:
"7 cheap treatments for year-round allergies"
"5 ways to dodge the peer pressure to spend"
"Are your frugal ways hurting us all?"
