In happy times, we never think about a major life-altering negative event that can happen to anybody, anytime. A financial crisis can hit us in any form- a car accident, a job loss, a serious health condition, or even a global pandemic. Although we cannot prevent or predict such an unfortunate event, the least we can do is be prepared to face it with courage. And by courage, we mean financial stability to sustain your family for months when you lose your job or become bedridden suddenly. So, what are the things you need to do to stay prepared for monetary crisis? Read the complete article to know all about it.
- Maximize liquid savings- Cash accounts, like money market and savings accounts, government investments, and CD (certificates of deposit) will be of great help in a crisis period. These resources are stable as their value do not change based on market conditions. In short, you can withdraw a big amount from these places without incurring any loss.
- Plan a budget- Preparing a monthly budget and sticking to it is the key to increasing your funds. Plan in the beginning of the month how much money you should spend to run the family smoothly. Keep track of all expenses and avoid unnecessary purchases.
- Routine maintenance is necessary- If you maintain your health, home, and car and don’t shy away from routine check-ups, you will be able to catch problems in their initial stage. This way, you can avoid expensive medical bills and repairs. Let us explain this to you with a simple example. Filling a cavity is a lot cheaper than performing a root canal. So, staying fit and looking after your assets will prove immensely beneficial in the long run.
- Say ‘no’ to credit card debt- Swiping your credit card whenever you wish is a terrible idea. The money you spend from your credit card is not your money. It is borrowed money and you have to pay interest on it. So, try to live within means and rely on cash payments to pay for most of your major expenses. Even if you have taken loans in the past, pay all the dues as soon as possible to be in a better financial state.
- Get insurance- Having insurance is a must even if you do not realize its value at present. Having a home and car insurance will pay for your damages in case a natural calamity damages your property or someone steals your car. Similarly, health insurance will cover most of your medical bills if an accident or operation takes place.
- Save for old age- You should begin saving at least some portion of your salary for old age right from your first job. You need to strengthen your finances before you retire.
Follow the above-mentioned guidelines to lessen stress and manage your finances wisely. We hope you never face a financial crisis, but if you still do, your savings will take care of you and your family.