You can save on your insurance payments once you have a fully-funded emergency fund in place. If you are out of debt, you should have this money at the ready for the small stuff. Read this post to understand how you can build this critical component of your financial foundation.

Though you have an emergency fund for those issues that cost less than a few thousand bucks, you need insurance for the big stuff. Insurance is necessary for everyone at every stage. But, while getting out of debt, for instance, you may have had your deductibles low so you can cover them more easily.

This blog post is specifically for those who are debt-free and building wealth. If you are a follower of Dave Ramsey, you will understand me when I say, you should be on Baby Steps 4 or beyond.

Save on Insurance Payments: Increase Your Deductible

When you have a fully-funded emergency fund, as my family does, you can set your deductibles higher, saving a lot of money over time.

Check out this quote from Huffington Post: “According to the National Association of Insurance Commissioners (NAIC), the average annual auto insurance premium is $841, and the study [Quadrant Information Services study, commissioned by insuranceQuotes] examined two different percentage increases and their respective savings (on average): Increase deductible from $500 to $1,000: 9 percent savings ($72). Increase from $500 to $2,000: 15 percent savings ($126).” Huffington Post

Of course, this is an average and can be as high as saving $245 per year in some areas of the U.S. But, if you are like me and my wife, we haven’t gotten into an accident in many years. So, by saving $150 a year, we are able to add that to our retirement fund. I don’t want to get too far into the math, but just to put it in perspective, after 10 years of the addition investing, we realize a $3000 increase in our retirement, for the risk of having a $1500 higher deductible.

It May Not Seem Like Much Today

Every situation is different, so you need to do the math. You could have multiple cars, and don’t forget the other insurances. For example, don’t forget that you can adjust the elimination period on your disability insurance and save even more. An average debt-free family can save $1000 per year by analyzing their insurance situation and taking back some of the risk.

But, if you are not a nerd like I am, all the differences between insurance companies, property values, and interest rates can get a bit confusing. So, it would be totally worth seeing a financial coach for a session to save hundreds or maybe thousands across all your insurance and savings needs.

The important thing to remember is to have a solid plan for all the money you are saving. Just because you have a few extra hundred dollars now that you are saving on insurance payments doesn’t mean it’s time to squander it all. You need to budget your new-found wealth. If you need a plan, read this post on the Anatomy of a Budget.

Save on Insurance Payments without Fear

Don’t worry, bad stuff will come, but now you have a defense in place to weather the storm. No fear, you have safety nets to handle the small problems and the big emergencies too. But people still have doubt, fear, and worry galore.

There are some people worried that $500 or $1000 is not enough when they are in one of the first 2 levels of emergency fund building. I’ve seen people suffer from the fear of missing out (FOMO) and can’t wait to finish funding the fund before indulging in expensive vacations or buying costly products. There are people who won’t raise their insurance deductible for fear of not having the disciple to rebuild their emergency fund after the storm has passed.

Remember that song, “Don’t Worry Be Happy?” Well, God came up with that a thousand years before that guy was ever born. Your Heavenly Father, the Maker and Owner of everything, is faithful. So, it doesn’t do much good to worry.

Because Jesus Says So

Read what Jesus said in the book of Matthew:

“That is why I tell you not to worry about everyday life—whether you have enough food and drink, or enough clothes to wear. Isn’t life more than food, and your body more than clothing? Look at the birds. They don’t plant or harvest or store food in barns, for your heavenly Father feeds them. And aren’t you far more valuable to him than they are? Can all your worries add a single moment to your life?

“And why worry about your clothing? Look at the lilies of the field and how they grow. They don’t work or make their clothing, yet Solomon in all his glory was not dressed as beautifully as they are. And if God cares so wonderfully for wildflowers that are here today and thrown into the fire tomorrow, he will certainly care for you. Why do you have so little faith?

“So don’t worry about these things, saying, ‘What will we eat? What will we drink? What will we wear?’ These things dominate the thoughts of unbelievers, but your heavenly Father already knows all your needs. Seek the Kingdom of God above all else, and live righteously, and he will give you everything you need.

“So don’t worry about tomorrow, for tomorrow will bring its own worries. Today’s trouble is enough for today.” Matthew 6:25-34 NLT

Don’t Worry, Be Happy 😊

Just think about how those emergencies will feel when you are not worried. When you aren’t expecting them to come but you know you have nothing to fear, your is totally transformed. Your outlook is completely different after you put the proper defenses in place. Your financial foundation is strong.

You may get into an accident or have a house fire. The apartment building you live in has a flood and your stuff is in the basement. You sit on a rock-hard park bench and your $1000 phone is in your back pocket. Someone may die or get a serious illness … I know, it will be tough. But you won’t be stressed out financially.

It’s Just an Inconvenience

Emergencies will really suck emotionally … but they will just be an inconvenient financially. Especially those little pesky emergencies, you know when life is just messing with you. You can just laugh at those now.

Not only do you have a fully-funded emergency fund; you have the proper insurance in place with high deductibles that the emergency fund can cover. Besides covering you when something unexpected occurs, insurance also gives you a sense of security.

Insurance allows you to relax and know that the big stuff is covered. But, don’t let those insurance payments dominate your expenses. Optimize your Outgo, save on insurance payments, and take your wealth-building up a notch.