While money is important for enabling life experiences, daily living, and for taking care of yourself, it’s also a source of great stress and worry for most people. Sometimes, simply living from day to day and taking care of obligatory bills can feel like a struggle, but serious problems start when the unexpected happens, or if your lifestyle requires change.
That’s why it’s essential to also respect your money and take the right measures to take care of it. Protecting your finances in any way you can means you can rest easier knowing money doesn’t have to be a huge issue for you.
Here are some crucial ways you can protect your income and finances.
Start an Emergency Fund
Paying your bills on time and having spare cash from month to month is, of course, essential. However, this only works when everything is going to plan – which unfortunately won’t always happen.
Consider what will happen to your finances if the unexpected happened.
This could be a home emergency, a car emergency, or an unexpected bill. If you don’t have any spare cash apart from the amount you need to pay your monthly bills, then you are going to be in a bad situation when emergencies strike, which could snowball into bigger problems down the line, such as short-term loans to pay for emergencies, getting into unexpected debt and paying high rates of interest.
Starting an emergency fund as soon as you can is a great way to protect yourself and your finances. Even if you begin small and put a small amount away every month, this will soon build up into a substantial amount.
If you’re unsure how much exactly to put into an emergency account, a good place to start is 3 months’ rent or mortgage payments in case something should happen with your income, giving you time to get back on your feet.
Begin Saving for Your Retirement
It’s never too soon to start saving for your retirement. Having your own, personal savings account solely for retirement savings will be very beneficial in the long run. Not only will it mean that you have more money to fall back on when you reach a certain age, but a substantial amount may also mean that you can retire earlier than expected. Even a very small amount saved every month for the next thirty years or so will result in a significant sum – and anything extra, large or small, always helps.
Make Any Necessary Claims Against Lost Income
Despite your best efforts to be sensible and safe with your money, loss of income is possible if you suffer an accident or injury that wasn’t your fault. On the path to recovery, you may be forced to stay off work leading to loss of earnings, or it may be that a severe injury means you can no longer work in your current job position. It’s essential to protect your income if this is the case by contacting work related injury solicitors to ensure that any claim is made against your accident and can, therefore, cover you financially.
Try a Side Business
There’s nothing wrong with having an extra income source to fall back on. This means you have a backup plan for your income should problems occur with your main employment. Side businesses can be great ways to earn extra cash from hobbies or interests to complement your main source of income.
Think about the areas of interest you have, and how you could make a small side business out of your skills or talents. This could include:
- Offering commissions for artwork
- Making ornaments or household items to sell
- Upcycling furniture and selling for a profit
- Blogging
- General freelance work
Furthermore, side businesses can easily grow into more lucrative forms of income and may become your main source of income if you are able to make money doing this than in your regular employment.
Invest in Different Places
Protecting your money is also about having it stored in different places. Having the entirety of your income in one bank account can easily cause problems if your account runs into problems, your account is inaccessible due to problems with your bank or – worse – you’re a victim of crime and have your bank details taken.
Think about having a wide range of accounts for your income and for various saving measures. You can also open a more secure savings account which is locked down, meaning money cannot be transferred from the account online.
You could also have a certain amount of physical cash you can store as a backup, should any problems arise with an electronic transfer or using your bank card.
Avoid Purchasing on Finance if Possible
In this fast-paced world, it’s so easy to get exactly what you need on next-day delivery – even if you can’t yet afford it outright. Finance and credit card options mean you can easily buy items that you need or want without having to wait to save the total sum.
However, this can lead to financial problems down the line, especially if you are an impulsive buyer who lacks patience. Finance and credit card purchases only mean that you will be paying more money in the long run due to interest rates. If the worst should happen in regards to your source of income, it may mean that you cannot afford the monthly repayments, inevitably leading to debt trouble.
It will take more time and patience to save in order to buy items outright, but it is the most financially-sound way to do so, without having to worry about repayments or debt. If you cannot afford to buy items outright, then it may be that you have to accept that you cannot afford certain items right now, as much as you might want them.
It may also be a positive step to embrace a more minimalist lifestyle if you are putting too much precedence on material things. Less household items and belongings mean less of a financial risk.
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