How to be better prepared for a personal finance crisis
When you are living paycheck to paycheck, the thought of encountering a major negative event like a job loss, an illness, or a car accident that affects your finances can keep you up at night. The only way to control your anxieties around such events is to start taking control of your personal finances in anticipation of unforeseen circumstances. Soon you will find how rewarding being financially disciplined can be and it will develop into a positive habit.
Maximize Liquid Savings
Categorically putting away savings in your bank account and fixed deposits will help you the most in a financial crisis. You have the option to turn to them first simply because their value doesn’t fluctuate with market conditions, unlike in the case of stocks, and other financial instruments in which you might have invested. This means you can take your money out at any time in your time of need without incurring a financial loss. Another factor to consider is that unlike with retirement accounts, you won’t face early withdrawal penalties when you withdraw your money. It is wise to save several months’ cash into these accounts before investing in stocks or other higher-risk investments.
Prepare to minimize your monthly bills
It all starts with cutting out the frills. Analyze your monthly budgets to find out areas where you could be paying less in bills. You can also look around for providers offering lower insurance rates in your monthly/annual premiums.
Find ways to earn extra cash
Think about it. Don’t we all have something we can do that could help us bring home some extra cash at the end of the day. That’s right, we are speaking of brainstorming side hustle ideas, something that could even be your passion. If it becomes one of your ways to make extra income, that’s always a win-win. It can also be selling off expensive things you don’t really use. It’s always the little savings here and there that add up to a meaningful solution in times of crisis.
Don’t put off routine maintenance
It is important to understand that it is usually matters that we ignore that enhance the possibility of it blowing up into an emergency. Be it your health, the upkeep of your car, or other assets you own. If you do not have the extra funds to go into such maintenance projects or routine check-ups to be in the know about your health right away, consider taking small instant loans from online lending companies like SmartCoin to avoid bigger expenses later.
The Bottom Line
While you can’t control the fact that life can throw you curveballs at any instance, you can at your end and prepare for such events by educating yourself, and exercising caution and discipline towards money matters.
