An important part of living a balanced and responsible life as a young professional is having a firm handle on our finances. We pay our bills on time, contribute to a retirement fund, meet regularly with our financial advisor, and live according to a realistic budget. We should be good, right? Well, if life weren’t so well known for throwing curveballs, especially when we tend to feel the most comfortable, then maybe we’d say you’re good to go. Otherwise, here are some things you may want to consider setting money aside for in order to avoid expensive surprises in the future:
While healthcare in Canada may be free, being ill and off work is not. If you ever need to take an extended period of time off work, you may think that with your “banked” sick days, or your company’s long-term disability or workers compensation policies, that you’ll be covered. Be advised, however, that not all of these policies are guaranteed to cover your particular situation. Additionally, many policies do not cover your need to care for others. If your parent, spouse, sibling, etc. gets injured or sick, you may need to take time off in order to care for them. To prepare for time off due to illness or injury, experts recommend saving at least three months worth of salary in order to have a suitable buffer of time to figure out your future finances.
Similarly, if you are required to care for a friend or family member that lives a plane ride away, you may be faced with having to pay for a last-minute ticket. Funerals also often require next-day travel and such tickets can cost into the thousands. If you live far away from anyone important to you, having a few thousand dollars saved up for next-day airfare will ensure that if something happens that requires your attendance, you’ll be there.
When buying a new car, big appliance, or the latest tech toy, we always make sure to get a good warranty. Many of us, however, fail to pay attention to the warranties, or lack there of, of our older high-priced items. Unless you were able to purchase a brand new home with all new appliances, it may be that the warranties for your hot water tank, furnace, dishwasher, etc. have expired, or are due to soon; and the same goes for your used or aging car. Keeping a record of warranties, as well as setting aside for those items that are no longer covered, is the only way to avoid a big financial hit when that tank or transmission goes.
You don’t have to have an aging pet to start worrying about vet bills. Do you know how much it costs to get your dog or cat’s teeth cleaned? Much more than it does your own, and yet you consider your own dental insurance to be crucial. Whether you have a senior pet in need of daily medications, a pet that has been involved in an accident, or you simply wish to provide your pet with the usual veterinary care, all in all, pets are expensive. You may keep your dog on a leash and your cat indoors, but when it comes to animals, anything can happen. Having a pet care fund set a side helps to take the money aspect out of any emergency and/or emotional decision making, allowing you to make the best choice regarding your pet’s care without the worry of going broke.
You never know when you’ll need a good lawyer. If you drive a car, are in a serious relationship or business partnership, rent out your basement, or like to “walk on the wild side” in any way, you may just need a lawyer one day. It doesn’t take much to land yourself in a sticky situation, and if you do, you want to be sure that you can afford adequate representation. Additionally, being sued doesn’t just happen on TV. If you engage in potentially risky endeavours, there is always a chance that someone may not like what you’re up to. Setting aside a fund for your own legal protection is a wise way to balance out your chancy lifestyle.