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• Counting on a home’s value to rise. Maybe. Maybe not. A home is worth only what someone is willing to pay for it. If you’ve neglected to keep up with the repairs, if it’s a buyer’s mar- ket, if the area in which it’s located starts a downhill slide, then your home’s value can take a dive.
• The cost of living outpaces income. It could happen. How much was your electric bill 10 years ago? What about your other utilities? Or a gallon of gasoline or milk or kitchen cleaner? Get the picture?
• Healthcare expenses. Moore writes that estimates for out-of- pocket medical expenses not covered by Medicare run higher than $200,000 for 55-year-olds who will retire in 10 years. This results in retirees looking for employment after they thought they wouldn’t have to work any longer.
Your Budget—A Marvelous Tool to Save Money for the Unexpected
Establishing and using a budget is the best tool for planning for and meeting emergency or unexpected expenses. Consider a budget a roadmap or strategy plan that gives you a heads up on anticipating these future expenses. Plus, using a budget and the discipline of put- ting money away each month to cover those expenses boosts your self- confidence and sense of control over your finances.
One of the smartest and most effective ways to have money on hand for emergencies is to get in the habit of “paying yourself first”—or put- ting some money in savings as soon as you receive your paycheck. In general, save 10% of your income, and then never touch it. It’s difficult to save if paying all of your other expenses comes first. Pay yourself (into a savings account) first and then pay your other bills. Saving may never be easy but it can become a habit, and you’ll be in a stronger position to deal with accidents, illness, the furnace or air conditioner going out, car or appliance repairs, or loss of employment.
Unexpected Expenses