Each year, Americans are faced with unexpected incidences that can significantly impact their finances, such as experiencing a serious accident. According to previous estimates by the National Highway Traffic Safety Administration, traffic accidents cost Americans over $871 billion each year, with the average car accident medical bill ranging between $3,300 and $57,000. For many, having to contend with the ensuing consequences of a serious (and sometimes life-changing) injury can be enough to push them into the dreaded debt spiral and financial instability. The sooner you can find ways for your family to save money and reorganize your finances, the better chance you have of achieving financial wellness in such an unexpected instance.
Assess Your Emergency Fund
In the immediate aftermath of your injury, your income streams may become blurred or, worse, non-existent. While you figure out your next move or wait on your insurance case to be settled, an emergency fund can fill the gaps in income. An emergency fund is designed to replace your income if you are unable to work- whether due to an injury, for personal reasons, or due to termination of employment. Most experts recommend an emergency fund of three to six times your monthly expenses. If you already have one, this is the perfect time to assess how long it can cover your expenses. An emergency fund is invaluable after an accident, since it gives you a timeline to finalize additional income streams, and it provides a great starting point for redrafting your new household budget post-injury.
Find Out How Your Insurance Policies Are Impacted
Any insurance claim made can automatically cause your auto insurance premiums to rise, regardless of who is at fault. According to estimates by InsuranceQuotes, insurance premiums can rise between 34 and 41 percent for someone with full coverage. While you can reduce your car insurance after an accident, you should also check with your insurer as to how your premiums will be affected. If you can get an estimate of your new rates, you can use this to plan for any increases.
It also helps to know what auto accidents increase your insurance rates so you can contest any disparities with your insurer if you need to. Most insurers try to minimize their payouts, so do your background research before approaching them. Janet, Jannet & Suggs advise free case evaluation from a legal expert, which can provide insight into potential settlement verdicts. Additionally, a professional valuation from an appraiser and past published settlements can help you gauge your compensation entitlement.
Revisit And Redo Your Budget Prudently
With unexpected costs and impacted income streams, reorganizing your budget helps you stay on top of bills and keep your credit in good shape. Firstly, list down all of your expenses (new and ongoing). You may have new insurance premiums, loan payments from a medical loan, or higher than previous credit card payments. You must be methodical and thorough with your current payment obligations so you can get a clear picture of your financial situation.
You can use a budgeting calculator to help you work out a new budget. If you find your new payment obligations are higher than you can afford, look for ways to cut your spending or seek the advice of a financial planner. Finally, keep your income understated, and make your debts a priority. This means catching up on any outstanding payments you may have missed while dealing with your injury. Missed payments can impact your ability to get credit in the future.
While it is difficult, you can get your life – and your finances – back on track after a serious accident or injury. While it may not look like like it previously did, being proactive in reorganizing your finances after your injury can make the process much easier and more achievable.