For many of us, financial problems are ever-present. Some of us have to face unexpected medical emergencies, while others, unfortunately, lose their jobs. These miserable events are not only stressful and depressing but can also be something that could hurt our pockets. While these concerns are often unavoidable, there are still ways for you to minimize the risk and protect finances.
A financial comeback is not as hard as it may seem. You only need to create a smart plan and take solid actions. Need help with this? Follow these useful tips on how you can have better control of your finances and be prepared for a crisis.
Get your debt under control
One common piece of advice about personal finance is to pay off all your debt before building up your savings. But let’s get real, debt, especially those as big as student loans and credit card debts, are not that easy to settle. As for emergencies, they can happen anytime, whether you’re prepared or not.
For such reason, some financial advisors suggest having a clear plan to manage your debt while setting aside some money. You can try the snowball method, where you start with the ones with the lowest interest rates up to higher ones. Or, you can go with the avalanche method, where you’ll use all your remaining money after expenses to pay off your biggest loans.
Maximize your liquid savings
Next, make sure you are building up liquid savings. Experts recommend using cash accounts such as certificates of deposit, money market, savings, and checking accounts, which values don’t fluctuate with market conditions. This is a smarter way of protecting your money instead of using instruments such as index funds and stocks. Having liquid savings allow you to access your money anytime you need to.
Before acquiring high-risk investments, it is important that you have several months of savings on your accounts. That savings should cover your overall living expenses of up to three months or so.
Create multiple streams of income
Limiting your expenses just for the sake of saving is not always the best solution. A smarter move is to actually increase your streams of income. Creating multiple income streams is also a great way to have a buffer if you lose your primary source of income. For instance, you can take a look at your hobbies or passion and find out how you can earn from them. Turn them into side hustles.
Do you love to write? You can work as a freelance writer. Do you have a knack for effective customer service? Try becoming a customer service assistant. You can also try investing in different financial instruments such as stocks, ETFs, and mutual funds. You can consider other income streams, including taking paid surveys, doing buy and sell, or creating an online course related to your professional field.
Acquire adequate insurance
Acquiring life insurance is something you shouldn’t ignore, especially if you’re the primary source of income in your family. This coverage provides financial protection for your family members in case something unfortunate happens to you. It’s vital that you find adequate life insurance that can cover your kids’ education.
Other financial saviors you should obtain are home or renters insurance and health coverage. This may be an additional expense in your monthly budget, but being protected by proper insurance coverage. For instance, health insurance can save your finances from expensive medical bills in case accidents happen.
Hire legal representation
To add an extra layer of protection, you should hire a lawyer to pursue claims for damages and injuries during accidents. For example, a car accident attorney can help you ensure that you’ll get the financial support you deserve from your insurance company, thus, saving you from emergency expenses.
They can push the insurance company to give adequate coverage for your medical care and file a lawsuit in case your provider refuses to give a reasonable settlement. At the same time, they can help you determine the fault rules in your location and whether you can collect compensation.
Keeping up with your finances is always a smart way to ensure you are prepared for whatever happens, whether you’ve been in an accident or your family faced a natural disaster. You can reduce that stress and fear from facing different financial issues by taking note of crucial pointers such as the ones discussed here. Still, we recommend seeking the help of a finance expert to ensure your money is working as it should be.