Would you be able to manage financially if you suffered a sudden loss of income? The possibility of your finances taking a hit due to job loss, illness, or serious accidents is high, and adjusting to this change if it does happen is incredibly stressful. This is why it pays to have a strong safety net for any eventuality that will affect you financially. Here are 8 tips to help you plan for a crisis:
1. Try to secure more than one channel of income
Aside from your main source of income, look for ways to make extra money so that you aren’t solely reliant on one source. Even small amounts can add up significantly over time. Click here for ideas on easy ways to add to your income -
2. Set up a budget and stick to it
Go over your monthly expenses, and cut out all unnecessary spending habits. Once you have a set budget, stick to it! Having a budget with also help with monthly saving.
3. Maximise your savings
Once you’ve determined your budget, put a set amount of money into a savings account every month. Call your bank and enquire about setting up new accounts that will acquire interest, and that won’t incur a loss for taking money out.
4. Renegotiate credit payments or interest rates
If you have credit card debt, call your bank and ask if you can get a lower interest rate.
5. Minimise monthly bills
Once you’ve gone over your expenses and set up a budget, you can easily see which payments are unnecessary. Cancel all services that aren’t essential and don’t fit into your budget. Also you’ve made cuts, try cutting down on things like water and electricity to minimise on payments.
6. Reassess your insurance coverage
Go over all your insurance policies. While having maximum coverage can prevent further crises, it’s also good to make sure you aren’t paying for coverage that you don’t really need. If you can get the same policy cheaper at another firm, change your insurance company. This can greatly reduce your monthly expenses. You can get a free quote and compare prices tailored to your situation here.
7. Keep up with routine maintenance
Don’t ever skip routine checks on everything from your car to your health. This way, you can catch problems while they’re small, rather than having to pay exorbitant amounts if you are blindsided by a major problem.
8. Pay off debts slowly
A crisis can hit you at any time. If you have a lot of debt, pay it off slowly. While paying it all off as quickly as possible may seem like a better idea, it will also minimise the cash you need to survive should the crises occur. Paying it off slowly allow you to maintain liquid savings, which is what you’ll rely on most.