This post is featured on behalf of Stacey White.
The term ‘financial disaster’ can cover a number of different events in your life, but it essentially refers to a situation which is totally unexpected that can have an untold negative effect on your life. Perhaps you suddenly lose your job, you suffer an injury that prevents you from working, your business collapses or you are the victim of a crime. Though people don’t like to think about these situations happening to them, if you are not prepared for them, you will have no chance to respond in the best way possible.
Ultimately, you need to take stock of your financial health and work out what action needs to be taken. You don’t need to give up enjoying life; you simply need to take appropriate steps depending on the individual situation that you are in.
Change Your Spending Habits
Making some simple adjustments to your spending habits can help to ensure that you have more money in your pocket at the end of every month. Start by drawing up a priority list of your regular expenses. You should also be factoring in emergencies and unexpected costs into your budget. It is the non-essentials that you should be looking to tackle first. The daily cappuccino, lunch at a restaurant, and few drinks after work. But you could also look to do something about the essentials list too. For example, compare your bills to check if you can get a better deal elsewhere. Now that you have some money left over, you could start channelling this into a savings account to use in case of a rainy day.
Look at Insurance Policies
There are various insurance policies which could be very beneficial should you need them at any point in the future. To start off with, life insurance will help to protect your loved ones financially in the event of your death, and this is especially important if you are the main breadwinner in the family. And then you have homeowners or renters insurance to protect your biggest assets from events like natural disaster, theft, and vandalism. As well as this, you could look into income protection insurance in case you are no longer able to earn for some reason. And, of course, don’t forget about health insurance.
Don’t Put All Your Eggs in One Basket
If you only have one source of income, you are putting yourself in a very precarious position. It just takes one negative event (being made redundant, the company going bust, etc) for you to lose everything. So, where possible, you should be looking to give yourself a backup plan. One of the most effective ways of doing this is simply by networking and keeping a close group of contacts. This way, if you should lose your job, you have some people who could help you out quickly.
Diversifying is also important if you plan to make some extra income by getting involved in the stock market. This way, if one of your stocks should suddenly tank, you have others which you can draw upon. You could also look into the various ways of making money online which could help get you out of a tight spot while you are looking for something more permanent. There are plenty of companies out there looking for freelancers these days and websites which bring the network together.
Upskill and Get Paid Accordingly
The more you develop your skills and add to your resume, the more you should get paid accordingly. Before your review meetings at work, make sure to do your research to check how much you are worth. Tell your employer about all the positive things that you are doing for the company and ask directly for a pay rise if they are not forthcoming in giving you one. If they are not willing to give you the amount that you want, look elsewhere for the companies that are. And if there aren’t any training programs available at work, search for the different options online. Anything positive that you can add to your resume should increase your worth and when you are making more money, you can afford to put more away into a savings account.
Understand Finances Better
The more you read, the more clued up you will be and you will put yourself in a much better position to handle financial disaster. You could even read about situations which don’t directly apply to you at the moment. For example, if you were to suffer an injury at work, what would you do? First of all, you may be able to claim compensation, so check out lawyers with this office location. And then there are all the ways that you have of making money from your laptop which you could fall back on in case you are unable to return to work straight away.
The major mistake that many people make is thinking that they are totally immune from financial disaster. In fact, it is something that could strike anyone at any time. But if you are better prepared to deal with it, you will put yourself in a better position to get back up on your feet as soon as possible.
First of all, you should look at your current spending habits, make a household budget, and work out if there are any ways that you can make some savings to give you something to fall back on. Next, you should look closer at the various insurance policies out there which could provide you with a major helping hand when you are in a tight spot. Try to diversify your income streams and investments as much as possible so that you are not putting all your eggs in one basket. Make sure that you are always getting paid what you are worth throughout your career. Finally, take steps to understand finances better.