4 Warning Signs You’re Not Prepared for Unexpected Medical Expenses
Unexpected medical expenses can pop up at any time. While most people have some form of health insurance, you’re still responsible for the out-of-pocket costs you might incur. If you’re not prepared with a solution, such as an emergency fund, those costs can significantly impact your finances.
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Keep reading as we look into four signs that you might be unprepared for unexpected medical expenses.
You’re Living Paycheck-to-Paycheck
According to a recent report from LendingClub, more than 60% of Americans live paycheck to paycheck. They also found that more than half of all Americans earning over $100,000 struggle to get from one paycheck to the next.
This means any sudden change to your expenses can greatly impact your finances. If you find yourself counting down the days until payday, it’s a warning sign that you’re unlikely to be able to readily cover a large, unexpected expense.
In cases like this, it’s essential to take a step back and understand where your money goes each month. By creating a budget, you can change your spending habits, making it easier to get from payday to payday without worry.
You Don’t Have an Emergency Fund
Emergency funds are crucial because they provide available cash for unexpected expenses. Unfortunately, according to LendingTree, 49% of Americans wouldn’t be able to cover a $1,000 expense if something bad happened.
Without a proper emergency fund to pay for unexpected expenses, you’d be forced to cover the bill other ways. Most people would turn to their credit cards, personal loans or loans from their 401(k). Each of these is a bad idea and could be avoided with a proper emergency fund.
You’re Not Open About Finances With Your Significant Other
Talking about money can be difficult for most people. However, it’s crucial to have this conversation with your significant other. It will ensure you’re both on the same page and understand each other’s goals.
One of the best ways to ensure you’re both on the same page is to consider making a budget. You should both manage this. This way, you both know where your money goes each month and can make adjustments together if needed. Being on the same page will help you reach your goals and strengthen your relationship.
Your Insurance Coverage Is Lacking
Most employers offer one or more health insurance plans to their employees. These plans are generally good, better or best. The most significant difference is the deductibles and the overall cost to the employee. If you’re in reasonably good health, you might opt for something with a lower monthly cost and a higher deductible. However, if you have a family, you might do the opposite.
Regarding health insurance, it’s essential to weigh the cost-benefit. If you have larger savings or an HSA account, a higher deductible might make sense. However, without the emergency savings to fall back on, it’s crucial to have stronger health coverage, even if it means adjusting your budget to afford the added costs.
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This article originally appeared on GOBankingRates.com: 4 Warning Signs You’re Not Prepared for Unexpected Medical Expenses
