How To Prepare For a Crash In Finances
There is nothing more frightening than the thought of being without an income. One minute you are working and everything is moving along nicely, and the next you are income-less and unable to meet your payments for the regular day-to-day of your life. The thought of being without what you need is a worry, especially if you have a family that you’re taking care of.
There are plenty of issues that can hit your finances when you least expect it and the pandemic should at least have taught us all that. You could lose your job after a personal injury, you could be in an area that is hit with a natural disaster – there is a whole range of things that can affect your ability to pay the bills.
The worry can keep you up at night, and yet there is still more that you can do to keep your finances within your control. Below, we’ve got some of the best steps that you could take to prepare for a crash in your finances.
1. Look at your savings.
If you don’t have any already, it’s time to get started. If you have cash accounts, money market accounts, and smaller investments, you can get started with maximizing your savings. This means turning them into a resource that you can draw on later.
You’ll be able to use your savings at any time and this will prevent you from going without when you lose your job. If you have larger obligations like a mortgage, you can make your mortgage work for you and have at least three months of expenses at a time ready – just in case.
2. Create an easy budget.
If you don’t know your incoming and outgoing amounts, you need to think about what money you need for an emergency fund. If you aren’t keeping a budget, it’s time to start. It can be shocking to know what you’re really spending on things, too! A budget won’t force you into change, but it may be enough to get you feeling like you can get a handle on your money.
3. Minimize your bills.
You should start cutting out things that could be taking your cash from you. Even those smaller amounts could be draining your finances and so that’s where your budget comes in. If you can reduce and minimize your monthly bills, you should. This will prevent you from spending too much cash and stop you from unnecessary spending at all!
4. Utility management.
From your bills to your smaller expenses, you need to consider managing your utilities better. Speak to the companies you pay regularly and see whether you can get a better deal on what you currently pay.
Families are wasting a lot of money just spending out without checking what their money is going on. Review your accounts every couple of months so that you know what you have to spend and when.
5. Pay down your debt.
When you can, pay off your debts and make sure that you aren’t relying on borrowing from others to pay bills. Credit card debt can take up a lot of your cash and it really doesn’t have to! Pay down as much as you can and get rid of it. It will take a few paydays of sacrifice but it’ll be worth it!
6. Speak to your credit card company and get a better deal.
You might still need your credit card, but that doesn’t mean that you can’t get a great deal on yours. If you’re carrying a balance right now, you could transfer the balance to another card.
You could even make sure that you are using a card with a lower rate. No matter what you do, talk to your credit card company and ensure that you know all of your options. They may even be able to lower your current interest rate and bring your payments right down to a more manageable level for you.
7. Speak to insurance providers.
Insurance can take up a huge chunk of cash when you are paying out for it, but it will also save you if you have a financial crash in your home. Insurance can cover you for contents and home insurance is there for you should natural disasters take over your home. Shopping around for great insurance is a must, and if you can pay for a year of insurance in advance, you should.
This will mean that your money every month is freed up as much as possible, and you’re still covered. You should also think about insurance to cover you in the event of a personal injury at work or elsewhere. You’ll need the extra help if you end up sitting at home for a few weeks trying to recover!
8. Keep up with home maintenance.
You want to know that your home, car, and health are in the best possible condition at all times. This means working to avoid injuries, keeping your home covered, and making sure that your car is paid for. If you keep up with routine maintenance for yourself, your car, and your home, you’re going to be in a better position if you lose your job.
It’s better to keep repairing the home than it is to replace the entire house! It’s also better to ensure that you are keeping up with your personal health maintenance. You want to know that you are as healthy as possible so that you can avoid the expense of added insurance and procedures.
Your finances could crash at any time and you might not see it coming. While you can’t plan for the unknown, you can plan for yourself to be covered in the event of anything. It’s always better to plan for a full account of money than be caught with a disaster and end up with nothing. Being prepared is smart in this day and age, so don’t let the world crash around you if you can avoid it.