Fidelity Smart MoneySM Playbook

How to help crisis-proof your life

Crisis-proofing 101

Recessions, natural disasters, pandemics, medical emergencies, layoffs: Whether global, national, or personal, you never know when an unexpected crisis can knock you off track. Nor can you protect yourself or your money from everything all the time. But luckily there are ways to prep your cash and career for the next “major historic event,” so you can face it head-on.

4 min estimated reading time

1. Cover yourself

Maintain at least minimum insurance coverage, such as health, homeowners or renters, and auto—and don’t forget life and disability. Enroll through your or your partner’s employer if you can, but also research backup public or private options in case of a job loss. Think about saving for medical expenses in an FSA or HSA. For an HSA, you’ll need to be enrolled in a high-deductible health plan.

Uncovered medical bills add up Medical expenses can become a financial emergency: The average cost of a 3-day hospital stay is $30,000. See footnote 1 in complementary region.

2. Plan for the worst

Assign beneficiaries—people you’d like your money to go to if something happens to you—on any applicable accounts, such as your 401(k), stock plan, brokerage account, IRA, or HSA. Also check accounts for beneficiaries you no longer want (think: an ex or maybe even a parent). Account ownership is legally binding and could supersede a will’s instructions.

Assign a beneficiary in minutes Assigning a beneficiary only takes minutes: You’ll need their full name, date of birth, and (sometimes) their social security number.

3. Create a buffer

Start your emergency fund by setting aside at least $1,000—or one month’s rent or mortgage, whichever is more—in an accessible account. That way, you wouldn't have to skip paying other bills or rack up credit card debt to pay for an unexpected expense.

Short on ready cash Only 43% of Americans could pay for an unexpected $1,000 expense from their savings. See footnote 2 in complementary region.

4. Work to knock out credit card debt

Put extra payments toward the card with the highest interest rate—but always make the minimum monthly payment for other cards, if you have multiple. Avoid racking up new debt. If you must use a credit card for a big purchase, pay it down as fast as you can.

Credit card debt costs you On average, American households paid about $1,000 per year in credit card interest and fees from 2018 to 2020. See footnote 3 in complementary region.

5. Save for a rainy day

After your $1,000 cash buffer, start saving 3 to 6 months of your essential expenses in an emergency fund to help cover you if you lose your job or face a sudden major expense. Try keeping your emergency fund in a separate account to avoid dipping into it for regular expenses and goals.

Building your backup plan 85% of Gen Zers and 79% of millennials say they would be worried about being able to cover a month’s worth of living expenses if they were to lose a primary source of income tomorrow. See footnote 4 in complementary region.

6. Be ready to bounce (back)

Have a game plan in case of a layoff. Nurture relationships within your network now—before you’re in need. Update your resume and job-related profiles with your recent roles and achievements. In case you ever lose access unexpectedly, add your personal email to important accounts and save personal documents, such as your work portfolio and positive feedback.

When job loss happens 40% of Americans have been terminated or laid off from a job at least once. See footnote 5 in complementary region.

Help me take action

1. "Why health insurance is important," Healthcare.gov, US Department of Health & Human Services. 2. Lane Gillespie, "Bankrate's 2023 annual emergency savings report," Bankrate, June 22, 2023. 3. Ashwin Vasan and Wei Zhang, "Americans pay $120 billion in credit card interest and fees each year," Consumer Financial Protection Bureau, January 19, 2022. 4. Lane Gillespie, "Bankrate's 2023 annual emergency savings report," Bankrate, June 22, 2023. 5. Jack Flynn, "20 must-know layoff statistics 2023: Who's being terminated from their jobs?" Zippia, June 8, 2023.

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