How to Prepare for Any Financial Emergency

The Boy Scout motto says it all: Be Prepared. They know what the rest of us slowly learn throughout our life: shit happens. You may not be able to predict what life is going to throw at you, but you can prepare.

Money emergencies are no different. The next demand on your bank account could be for a car that won’t start, a house that won’t heat, or a kid whose teeth suddenly won’t grow straight. Avoidance of these expenses is the best strategy. Regular service on your vehicle and maintenance in your home will go a long way towards eliminating these financial surprises. But sometimes, circumstances are out of our control, and we still have to pay up. Here are three strategies to help you prepare for the next unwelcome surprise.

Only Buy What You Can Maintain

Surprise expenses can’t be avoided, but they can be managed. My parents used to own an expensive car called a Jaguar that broke down often. Luckily, they could afford the repairs. But if you know a vehicle is going to be costly to maintain, then don’t buy it unless you have the money to support the ongoing costs.

Fixing luxury sedans isn’t a skill most people have, but many other things are. You may be able to repair your own items around the house. If you have the skills to fix something up yourself, spending a little more money might be okay. If not, think about avoiding the expense altogether.


The best way to prepare yourself for an emergency is to have someone else pay for it. That isn’t quite how insurance works, but it’s not far off either. Paying a small amount up front can save you from large expenses down the road.

Home, auto, and life insurance are prominent examples, but insuring yourself against an emergency goes farther than that. For example, if you are like me, you routinely skip the insurance or protection plan on household items you purchase. This is the smart move unless one minor mishap can cause significant trouble.

For example, you probably don’t need to spend $79.99 on the protection plan for your $1,000 computer. But what if your job depends on that computer? If a blue screen of death would prevent you from working remotely, or your children accessing their homework, then an additional amount up front is going to be worth it.

Line of Credit

My method of preparing for any emergency is to have a line of credit on standby. This includes both a home equity line of credit and a line for my business. Should an unexpected expense arise, I know exactly where I will go first. 

Because of the campaign against debt in this country, there is a general aversion to using a line of credit as a backup plan. Ignoring borrowing options is shortsighted. While I agree that less debt is better than more debt, this is the exact reason credit exists. Utilizing debt to cover a one-time expense, rather than building the use of it into your daily lifestyle, is a great strategy. 

Your level of preparation will determine whether the next big check you write is a surprise expense or a catastrophe. In fact, the only surprise would be if you didn’t have a significant financial event just around the corner. 

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