If an accident should befall you or sudden unexpected financial cost impact you out of the clear blue sky, and you haven’t planned for a rainy day, it could lead to financial ruin and despair. However, if have been thinking of setting up a financial safety net around yourself but lack the clarity of devising a strategy, help is at hand.
Having an amount of money in an account that you do not touch except for when something crucial in your life happens, such as a surprise medical bill, damage repair in your home, or perhaps you’re laid off at work, can keep you afloat and maintain your living standard. The importance of an emergency fund cannot be overstated.
Strategy and reason
You should first all calculate how much money a month, you can afford to put away from your earnings and weekly expenditures. Take into account, your mortgage or rent, the weekly shop and any routine payments you are obligated to, such as paying a tutor for your child’s music lessons. A good mark to hit is to save up 3 – 6 months worth of your living cost. So in essence, should you be out of work, or lying in hospital, you have saved enough money to run the household utilities such as bills and mortgage or rent payments.
It goes without saying but, the less money you have saved up, the higher the risk of defaulting on your obligations. Not sitting down and accurately writing out what your weekly average spend is, will also run the risk higher of your living standard lowering substantially. If you have an unreliable aspect in your life, such as a faulty car, or computer, although they aren’t essential needs, It’s best if you factor in the repair cost into how much extra you’re able to save a month.
If you’re involved in an accident, which wasn’t your fault, and you’re physically hurt, you should not be forced to pay for your healthcare or earnings losses out of your own pocket. If you can settle the case outside of court, with both parties agreeing on an amount of money to be paid by the guilty side; do this at a legally valid practice, such as a solicitor.
If you do go to court, this following method is still valid. When an amount is agreed, the time schedule will be important. A lump sum payment takes time for it to be processed as it is a one-time cash extraction from an account. However, you could choose to go with a structured settlement loan, which is a form of a direct cash injection. This scheme is great if a financial obligation is pivotal in your circumstance, e.g. you’re behind on a rent payment under the threat of eviction.
If you have been unfairly dismissed from work and have been with the same employer for or more than 12 months, you may not have to dip into your emergency fund at all. You can take your former employer to a tribunal where if deemed unfairly treated, you’ll be granted a basic award or a compensatory award.
The compensatory award is for employees who suffer a loss of earnings or other direct losses as a result of an unfair dismissal. The amount is determined by the tribunal considering the equitable circumstances of your losses regarding the employer’s actions. A basic award, only calculates a certain percentage of your pay, for a number of years you have worked for the employer; this will factor in your age bracket as well.