Prepare for Financial Emergencies by Following These Simple Guidelines
We have learned from the pandemic that we can never be too prepared for an emergency. We must constantly live and build structures that help to mitigate the impact of emergencies. And the good news is that there are steps you can take to prepare for and mitigate the effects of a financial emergency.
Here are a few suggestions to help you avoid the effects of a financial emergency.
Pay off your debt
It’s easier to deal with any financial emergency when you are debt-free. Therefore, avoid debt as much as possible. If you have a debt to pay, create a payment plan and stick to it. Your debt payment plan may appear insignificant in comparison to the total amount owed, but it is far preferable to having no plan at all.
Having a payment plan and sticking to it also helps to cultivate discipline, a critical life skill. Discipline allows you to set goals and follow through on them until they become a reality.
It’s easier to deal with any financial emergency when you are debt-free. Therefore, avoid debt as much as possible. If you have a debt to pay, create a payment plan and stick to it.
Cut your monthly expenses
If you do an audit of your current monthly expenses, you may be amazed at how some items on your list of expenses are not very necessary. To prepare for a financial emergency, keep your monthly or regular expenses low. The money saved from this can be diverted to your emergency fund or to pay off certain debts.
Review all your current expenses to guide you while you cut down on your expenses. Avoid continuing to pay for a service or product that no longer serves you. For example, cancel a gym membership subscription, or TV streaming service you no longer use. There is no point in being sentimentally attached to an expense that is not adding value to you.
Consider your current expenses, conduct an audit of your wants and needs, and cut back on areas that require it. Every penny is important, so treat it as such.
Build an emergency fund
Building an emergency fund simply means putting money aside for rainy days which will always come. While everyone appears to be aware of this, only a few people plan for it by saving.
The ideal recommendation is to save three to six months' worth of basic expenses. It may take some time to save up that amount, but consistency is key. Look for every possible way to increase these savings, such as cutting back on spending, selling old items that are no longer in use, and identifying and putting a lid on any financial leakages.
Be open to extra income benefits
The more you grow your finances, the more you are protected from the negative impact of financial emergencies. And if you want to grow your finances, you must consider multiple income streams. Some call it a side hustle, but whatever you call it, having another source or sources of income in addition to your primary source is important.
Having multiple sources of income can help to alleviate your financial burden. Combining two or more jobs may appear daunting at first, but it is possible. Make use of your other skills and monetize their worth. For example, in addition to working in a bank from Monday to Friday, you could hold a weekend online coaching class for young professionals in your field.
The more you grow your finances, the more you are protected from the negative impact of financial emergencies. And if you want to grow your finances, you must consider multiple income streams.
Consult with your financial advisor
Everyone requires assistance, especially when navigating unfamiliar territories and experiences. Seeking financial advice is one of the most certain ways to prepare for financial emergencies. Your financial planner can assist you in developing a plan to help mitigate the impact of emergencies.
It is important to note that your relationship with your financial planner extends beyond emergency planning and includes practical knowledge on insurance, pensions, and other financial packages that help to solidify your financial status.
Beyond your current emergency plans, Oak Pensions prepares you for retirement with a solid financial plan that secures your future.
If you're ready to take the first step towards a blissful retirement, we are here to help. We offer Retirement Pensions Advisory Services to our various customers. You can reach our dedicated team of professionals via our multiple channels: telephone helplines, email, website, face chats and physical visits to the office.
Everyone requires assistance, especially when navigating unfamiliar territories and experiences. Seeking financial advice is one of the most certain ways to prepare for financial emergencies
ABOUT THE AUTHOR:
Ernest Ademola Ehigie is a Copywriter, Content Developer, Author, Brand Consultant, and Communications Manager with over 5 years in marketing communications. He has written several articles, policy documents, press releases, radio and TV adverts for businesses and organizations. He's the author of the book, "Why You Must Lead" and currently works as a content manager for Detail and Avedia, a leading retail and media consulting firm.