Sometimes life takes a left turn. Your perfectly well-laid plans go off the rails. Something that you weren’t at all prepared for happens when least expected. This can be a good left turn, or a bad left turn. It can be big or it can be small. My favorite small, good left turn is when you reach into the pocket of a jacket you haven’t worn in a while and you find a twenty dollar bill. A small, bad left turn happened to me last week when a mercifully mild case of Covid derailed my plan to return to the office after the holidays. I’ve had every vaccine and booster available. I had avoided Covid successfully for nearly three years. But my number finally came up and I took my turn with the virus that continues to have its grip on the world.
It’s truly impossible to prepare for every eventuality. Life is going to happen and you never know how it’s going to play out. But you can do some things to make sure you are ready for those left turns. For the small things the best thing you can do for yourself is to have an emergency fund—a savings account that you don’t normally touch so you have a place to turn in case of the unexpected. This is the place to turn in case of the unexpected car repair, the surprise medical bill, or the emergency trip home to see a sick relative. This is NOT the place to turn when the new iPhone becomes available, or you want to travel for spring break. In a perfect world everyone would have an emergency fund with three to six months of living expenses. But this world is not perfect and money doesn’t grow on trees, so slowly building your way up to a $1,000 emergency fund is a solid way to start.
But what about those bigger surprises? That’s what insurance is all about. At a very minimum everyone should insurance on their home and their person. But if you own something that would cost more than your emergency fund to replace, it’s likely worth insuring. Let’s start with the obvious one. Healthcare in the United States is of outstanding quality. But it is also ridiculously expensive. Health insurance makes that more manageable. Rather than paying full price every time you have a medical expense, you pay a regular premium to the insurance company, then in return the insurance pays most of your medical bills (minus a designated co-pay/co-insurance amount). Nobody ever plans to have a major injury or illness. But trying to get through one without the assistance of health insurance could be financially disastrous.
And now that you have your person insured, it’s important to cover your belongings as well. If you own a home it’s fairly obvious that you should insure the property to protect it from fire, falling trees, and other unexpected life events. But renters also should make sure they carry insurance. A fire can hit an apartment building as easily as a house, and if you don’t have renter’s insurance, you may find that you don’t have any way to replace your belongings if they are destroyed. Homeowner’s insurance covers the building and belongings. Renter’s insurance covers only the belongings. Some students may find that they are covered by their parents’ homeowner policies. But if you don’t have other coverage, it’s worth finding a renter’s policy to make sure you don’t unexpectedly need to come up with enough money to replace everything you own.
The insurance conversation could go on and on. Cars, vacations, concert tickets, jewelry, RVs, computers. If you can buy it, you can likely insure it. And if you own it and can’t afford to replace it, you likely need to insure it.
Are you as protected as you need to be? You never know when life is going to take a left turn.
