How to prepare for 3 personal finance nightmares

Review some steps you can take now to help you sleep easier later.

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Even if you're doing your best to be responsible with your cash, there are plenty of forces outside of your control that pose a threat to your financial stability. Rather than allow the thought of personal finance nightmares to keep you up at night, take these proactive steps to make sure that you're prepared.

The nightmare: You can't get a loan when you need one.

How to sleep easier: As long as you maintain good credit, you should have no trouble getting a loan for a car or a house (as long as you can afford the payments). If you have less-than-perfect credit, start taking steps to fix it. First, set up your bank account to automatically make the minimum payments on all of your outstanding debts, including credit cards and student loans. That way your score will never be dinged for a late or missed payment.

Then, set to work methodically paying down the debt to reduce the amount of overall credit you're using (and boost your credit score). If you have extra cash, put that toward an extra payment on the debt with the highest interest rate. Once that debt is paid off, take any extra cash along with the money that was going toward that payment and move on to the account with the next-highest interest rate.

The nightmare: You lose your job.

How to sleep easier: The most immediate financial problem when you're let go from work is that even though the paychecks stop coming, the bills don't. Even in a strong economy, it’s not uncommon to find yourself out of work for a period of time. Prepare yourself for these times by setting aside some money in an emergency account to help hold you over until you find your next gig. Aim to eventually have three to six months' worth of expenses saved up in a separate account, so that you won’t be tempted to tap into it for everyday spending.

In addition to preparing your finances for a potential job loss, it's also important to make sure that you're set up to easily find your next role. That means making sure that your resume is always up-to-date and pushing yourself to attend networking events and connect with peers even when you’re happily employed.

The nightmare: A medical emergency leaves you with huge bills.

How to sleep easier: Even with insurance, a catastrophic medical event can leave you with sizeable medical bills. You can minimize the risk by carefully researching your health plan during your company's open enrollment period and understanding exactly how high your out-of-pocket costs could go in a worst-case scenario. And while you're at it—take advantage of everything your health insurance has to offer (yearly checkups, free screenings, flu shots, etc.). While you can't plan for accidents, maintaining a healthy lifestyle overall may help you stay in good shape physically, mentally, and financially (think fewer trips to the doctor (co-pays) and pharmacy, fewer days out of work). And finally, this is where that emergency savings fund comes in handy again—use those rainy day funds to help cover, or at least minimize, unexpected medical bills.

While it's impossible to fully prepare for every financial nightmare, making a few small moves now is the best way to make such situations slightly less frightening. After all, there are plenty of other scary things out there that can keep you up at night; your finances shouldn't be one of them.

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The statements and opinions expressed in this article are those of the author. Neither Fidelity Investments nor your employer can guarantee the accuracy or completeness of any statements or data.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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