We’ve all been there—suddenly hit with an unexpected expense that leaves us feeling financially vulnerable. Whether it’s a surprise medical bill, car repair, or home maintenance issue, these moments can leave you scrambling for a solution, all while feeling that sinking feeling in your stomach.  

Wouldn’t it be great if you didn’t feel that way when hit with the unexpected? If you had a clear solution that softened the blow and allowed you to move on with life? I’m here to tell you that’s possible. And probably easier than you think. 

Here are five actionable steps you can take to prepare for life’s rainy days and prevent that sinking feeling from taking over. 

1. Ensure you have adequate insurance coverage. Insurance is your first line of defense against unexpected costs. Review your insurance policies, including home, auto, health, and disability, to ensure you’re properly protected against major unexpected costs. 

How much is “adequate”? Consider how much you would NEED if you had to use the insurance. For example, with homeowners or renters’ insurance, how much would it cost to replace your belongings? Similarly for car insurance, how much would it cost to for repair or replacement of your vehicle? If you don’t know, talk to your insurance agent. If it’s been over a year since you’ve reviewed your insurance coverage, now might be a good time! Inflation has increased the costs for just about everything, but your insurance coverage may not increase accordingly unless YOU do something.  

PRO TIP: save the amount of your DEDUCTIBLE. I like to have a clearly dedicated savings account for this. For example, if your health insurance policy has a deductible of $2000, wouldn’t it bring great peace of mind to know where that $2k will come from, should you need it? Consider having a “health” or “insurance” savings account with $2k so you know exactly where to go in an emergency. This will help ease the stress you’ll be feeling. 

2. Fill your emergency savings bucket. This is a must-have regardless of your age or financial situation. Aim to keep 3-6 months of living expenses in a separate savings account. If you don’t have that amount saved yet, try setting up automatic transfers each time you get a paycheck, and pay it like a bill. Even if you start small, like setting aside $10 per week, it can add up quickly: in one year, you’d have saved $520. 

PRO TIP: use a high yield savings account for this and make interest while your money sits there. For example, if you’ve got $520 in a savings account making 4.0% for a year, you’ve made over $20 in interest just for not touching it! To get ahead with this, FORGET about your emergency account and only use it when a true, unexpected emergency strikes. (In other words, not when you want to pay off a credit card or need money to buy school supplies).  

3. Remember preventative measures like routine maintenance. Regular maintenance on your home and vehicle can help prevent costly repairs or replacements in the future. 

Vehicle Maintenance: Many cars have maintenance reminders now – don’t ignore them! If you have an older car that doesn’t have this feature, set a calendar reminder to get regular oil changes, tire rotations, and inspection of your brakes and fluid levels, as well as other recommended maintenance based on mileage.  

Home Maintenance: Ask your insurance company for a checklist of preventative maintenance – things like changing HVAC filters regularly, checking that fire extinguishers are still in working order, getting your AC unit serviced, taking a look at gutters and downspouts for damage, replacing batteries in smoke detectors. Small things like this can help you detect an issue early, before it gets out of hand and causes a costly surprise expense.  

4. Check out and improve your credit score. Want access to better borrowing options if disaster strikes? The secret is in your credit score. 

First, check out your credit score. Many banks and credit card companies offer this for free now, or you can use something like Credit Karma. Then, look for what is affecting it (outstanding balances? Number of accounts opened? Utilization?). Lastly, ask how you can improve it. (close accounts? Open accounts?). A better credit score can give you access to more favorable borrowing options if you need to cover an unexpected expense.  

PRO TIP: Chapter 4 in my book Peaceful Prosperity explains this in detail. 

5. Take a moment to review past unexpected expenses. Pull out your bank statements and take a quick glance to identify common unexpected costs last year. Look for big numbers in categories like auto, home, medical, and family expenses. What stands out? Doing this not only helps you get a realistic picture of your finances, but also helps you to anticipate and plan for future surprises. What did you do last time? What worked and what didn’t? What else could you do? Having a clear picture of your finances helps you build a strategy for managing unforeseen expenses more effectively.

PRO TIP: Download a Budget Template from our website if you need help getting started. 

And there you have it! 5 ways to proactively prepare for financial challenges and turn them into manageable moments. If you just do one of these today, you can help avoid financial stress in the future. Remember: making small tweaks to your financial habits can make a big difference.