Saturday, August 19, 2017

Prepared, Not Paranoid, Plans That Every Money Smart Individual Should Have

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There’s no way to truly future-proof your money. However, there are plenty of ways to at least be prepared for the twists and turns that life might throw at our finances. Many people think “it won’t happen to me”, but the truth is that financial upheaval is more common than any of us might like to think. Sudden unemployment. Injury. Accidents. Home damage. There’s a lot that can immediately tear away your financial health if you’re not careful. That’s why everyone could stand to be a little more prepared.

Invest in security, first

While you have enough income to budget toward a goal, consider which goals you prioritize. Instead of focusing solely on your next holiday, or even long-term purchases for financial growth, invest in protecting what you already have, first. For instance, most know to invest in home, auto, and pet insurance. But you can invest in income protection insurance, too, that keeps your cash flow healthy even if you’re put out of work by an injury or illness.

Don’t wait until you’re sinking in debt to deal with it

Debt isn’t an evil. Controllable amounts are perfectly fine. However, controllable amounts can become uncontrollable in a moment if your financial situation changes. Instead of coming up with ways to deal with debt when you’re in danger of getting in trouble, create a debt management plan now. Always be paying off more than the minimum into managing current debt. That way, if you do find yourself in trouble, you have a significantly smaller sum to pay off. As a rule, avoid getting into debt using assets like the home or car as collateral, even when your current financial situation is healthy. Unless you’re desperate and your credit score is suffering, it’s not worth potentially losing those assets.

Expect bumpy patches

Everyone should take some preparation to anticipate the different kinds of events that can rock their finances, too. For what insurance can’t cover, saving up for an emergency fund can help soften the immediate blow of a crisis. It’s recommended you save between three-to-five months’ worth of wages to cover even the most serious of trouble. Beyond saving, knowing your rights and the options available to you, like making personal injury claims or claiming unfair termination in the event your income is threatened can help you at least be prepared to plot the right course when your finances are taken out of your control. We can all identify many sources of financial hardship that we can start to prepare for in advance.

Have emergency mode ready to go

Just as important as preparing emergency income is preparing an emergency financial plan. For instance, consider all your costs, your bills, and services, and start ordering them by priority. Finding the costs you can readily cut first will make it much easier to start immediately saving money and spending less. Similarly, find the benefits you can apply for if you need to and how long those processes might take. Don’t get caught unawares, have emergency mode ready to go as soon as you need it.

The more informed you are, the more invested into security, and aware of your options, the better. Don’t let your finances be at the whims of fate. Start protecting them now.

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