Bankruptcy isn’t necessarily due to careless spending
The first thing that comes to many people’s minds when they think of bankruptcy is overspending or careless money management, but the reality of going bankrupt is often something very different. In fact, the real reason why large numbers of American’s find themselves in financial trouble has nothing to do with self-indulgence, and instead is a matter of medical debt.
A study of bankruptcy filings in the United States found that 66.5% of bankruptcies were due, at least in part, to medical expenses. The research also found that an estimated 530,000 families turn to bankruptcy as a last-ditch effort to rescue their finances after suffering from medical issues or bills. Here are three things you can do to avoid falling behind because of unexpected medical expenses.
1. Review your health care coverage
Do the words premiums, deductibles, and copays sound like a foreign language to you? Well, you’re probably not alone. However, it is important to understand what each of these words means, because they’ll give you an idea of how good your health insurance coverage is, especially if you work at a big company where you can choose from several plan alternatives. Make sure you have the coverage plan that works best for your needs. Take a look at this quick guide to health and disability insurance to get you started.
If you don’t have employer-provided medical coverage, you should look into individual policies provided by the Affordable Care Act (ACA). If you need this type of coverage, check out your options at healthcare.gov.
2. Build your emergency savings
Regardless of how good your medical insurance is, there will always be out-of-pocket expenses you should be prepared for. An essential part of your financial plan should be having an emergency fund in place to cover those unexpected (medical) expenses. Be sure to keep your emergency funds in an easily accessible account should you need them — like a savings account.
3. Join the membership that has your back
Working with a financial institution that has your back is vital to being prepared for any financial emergency. At MoneyLion, we offer membership perks like you’ve never seen before, including Zero-Fee Checking℠, Zero-Fee Managed Investing℠, and 0% APR Instacash℠ cash advances when you need them. Stop paying unnecessary bank fees, and start setting aside more money into your savings. Also, once you upgrade to MoneyLion Plus, you’ll have anytime access to $500 5.99% APR Credit builder℠ loans should you need them. Learn more in the MoneyLion app or at moneylion.com today.
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