How To Prepare for Financial Emergencies

  • February 18, 2019

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According to some analysts, the future of the global economy is hard to predict, and there might be another crisis around the corner. Even people who were in a stable financial position back in 2007 suffered due to the credit crunch, so it is important that you are prepared and can deal with whatever the future brings. No matter if you are living a comfortable life now, you have to ask yourself what if the cost of living increased by up to 20 percent, or if you had to pay unexpected medical bills or other expenses? Having a side hustle and a residual income is a good way of surviving challenging times. Below you will find a few ways you can be prepared for financial emergencies.

Your Pension Contributions

If you are looking to protect your financial future, chances are that you will have to change your attitude and start thinking long term instead of living for today. You might have a good job and a salary that allows you to do the things you always wanted to, but what happens if you lose your income or your circumstances change and you have to reduce your hours or take a pay cut? If you don’t save up enough for your retirement, you might end up having the time, but not the means to enjoy it.

Regular Savings

Having backup funds instead of taking out a loan or using your credit card every time you are dealing with financial emergencies is  a great way of securing your financial future. It is crucial that you get yourself and your family prepared for the events that cannot be predicted. If you have to deal with an illness, or your home needs urgent renovations, you would rather have the money in the bank instead of getting into debt and committing yourself to paying high interest for years to come.

Smart Investments

You can also make some smart side hustle investments in your future, even if you don’t have hundreds of thousands if dollars to play with. Starting trading online and winning small before you would risk all your savings might be a good way to get started. However, you can also buy shares in property development companies or start your real estate venture owning only a part of a home. After all, you will need to make investments that will get you the backup funds you will need to deal with unexpected expenses or to follow your dream after retirement.

Side Hustles

In case your current job is giving you a steady income, but it is not enough to afford some of the small luxuries you are looking for to live the lifestyle of your dreams, you will have to think about putting your skills to the best use. There are plenty of websites online similar to fiverr.com, which give you the flexibility to complete gigs remotely in your own time and earn a few extra dollars each week to put toward a larger purchase or to top up your savings.

Scaling Your Business

In case you are in business, and you are getting a steady flow of clients, you will need to make sure that you are able to increase your income so you can work smarter instead of harder. Being comfortable might be a good start, but don’t you want to get more out of life? If you have achieved a level of success in your business, you will need to multiply it and grow it, so you can deal with the financial troubles and secure your future. Investing in technology and automation might be one of the best ways of scaling your business.

Insurance

It is important that you deal with the problems you cannot prevent in your business and your home life. Having a home, health, life, and car insurance is something that is straightforward and you can see the benefits of getting  a policy in place. However, what happens to your business if you were to get hospitalized and no longer able to deal with day-to-day issues? It is crucial that you have a legal document that deals with this eventuality, so your assets can be protected and looked after by a trusted person.

Regular Financial Reviews

Smart people keep an eye on their finances and get their products reviewed regularly. You need to know that having the same account for years, or even decades, does not guarantee the best rates and deals. You might want to sit down with a financial advisor or do your own research. Thanks to the recent developments in information technology, you can now use a 15 year mortgage calculator to compare the different deals and the benefits of the packages. You might also be able to reduce the term of your mortgage by getting a better deal, making your dream of financial freedom easier to achieve.  

Realistic Plans

If you have an income for a 3-bedroom apartment, and you stretch your budget too far, you are likely to end up in trouble. The same applies to car purchases and other important investments. You will need to get realistic when it comes to your budget and how far you can stretch it. You might want a supercar, and be able to pay the installments, but have you thought about the cost of insurance, maintenance, and tax?

Setting Your Priorities Right

Young people often get caught up in the notion of conspicuous consumption, and buy things they don’t really need. The emotional satisfaction and the social status you are getting from buying luxury goods might be tempting, but will you be able to maintain the lifestyle and the appearances when things don’t go according to plan? Pay off your bills, your rent and mortgage, your insurance, and other credit before you allow yourself little luxuries in life.

If you would like to be well prepared for the financial challenges that are out of your control, it is crucial that you get smarter about your money and plan long term.

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