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7 Ways to Protect Yourself Against Financial Hardship

In today’s modern business environment, complete financial stability and job security is an extremely rare thing. More and more people are classifying themselves as self-employed, often out of necessity rather than choice. And if disaster should strike, how can you make sure that you are financially prepared for anything that life could throw at you?

This is one the main questions that people ask themselves because you never know what could be waiting around the corner. The people who are best prepared are more likely to be able to weather the storm when life hits them with unexpected crises. If you feel like you need to be better prepared, here are some of the top ways to protect yourself financially when times get tough.

Maintain A Monthly Budget

Write a list of your general expenses on a month by month basis, calculating what percentage of your income will be spent on different areas of your life. Split these up into essentials and nonessentials. Obviously a roof over your head and food to eat will take number one priority, closely followed by your monthly bills and anything else you need to maintain a basic standard of living. This way, you will be aware of the things that you can cut back on if times get tough. In the nonessentials column, you could even divide these up into priority order. This will give you a better picture of exactly what you are spending today, and even some expenses that you can cut back on today.

Get Out of Debt

 

Near the top of the list of preparing yourself financially should be getting out of debt. Monthly credit card fees, overcharge rates and other interest that you may be paying is all money that is going down the drain. If a negative financial event suddenly befalls you, these bills will skyrocket even further and you can easily find yourself in a vicious cycle. Before making big purchases, it’s better to have the money saved. That way, you will always be living within your means and won’t be at risk of being hammered by the big banks and credit card companies.

Get the Right Insurance

You can protect yourself against some crises that may happen to you with the right insurance. As an example, contents insurance can protect you if your house is burgled. This means that you won’t have to shell out to replace everything that has been lost. Life insurance will also protect those who are left behind should the worst happen. If you run your own business or are self-employed, there are various types of business insurance out there that can keep you protected in the event of certain unfortunate events. As well as protecting yourself financially, it can also give you much needed peace of mind to know that you are covered.

Know How to Respond

Savvy business owners have disaster aversion plans in place so they can protect themselves. The same should be done for your own personal finances. If you know the steps to take in the event of a crisis, you will be better prepared to respond accordingly. For example, if you get involved in an accident, you may well need to contact a solicitor such as lawyertime.com if you are entitled to compensation or lose earnings as a result of it. Having a contingency plan means that you will be able to respond straight away rather than spending valuable time working out what you need to do next.

Create a Savings Plan

 

One of the best ways that you can protect yourself against financial disaster is to have savings that you can fall back on. Work out what percentage of your salary that you can put away in the bank, and stick as closely to this as possible. Pretend that your salary is 10% lower as that is what will be going away every month, then you will feel less tempted to spend the money on other things. Getting to the stage where you have at least six months’ salary in the bank will give you good protection against anything that may befall you.

Have Other Revenue Streams

If you should happen to lose your job, it’s a good idea to have other revenue streams so you can keep money coming in. The internet has provided so many opportunities to raise some extra cash. You may be able to freelance for a while – there is plenty of work for writers, designers, photographers and web developers to name but a few. Though a lot of these may not be hugely well paid, they can still provide a valuable source of income during a difficult time.

Another option is to get involved with the sharing economy. Many people make extra money letting out their spare room, renting out storage and driveway space or selling their old things. You can even rent out your car, items of clothing or household objects. Even if you don’t think you have anything of value, with so many online platforms, it’s more than likely that you do!

 

Live Frugally

 

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Making a few simple lifestyle adjustments can really make all the difference to your financial situation. Plan out your meals before you go to the supermarket, writing a detailed list so you don’t buy unnecessary items. Buy items in bulk as you will get them much cheaper. Drink coffee at home rather than spending on your daily Starbucks. Shop around for insurance so you get the best deal. These are just a few things that you can do that can really add up over time. You can put the extra money aside in a savings account to protect yourself financially in the event of a disaster.

 

These are just a few steps that you can take in order to protect yourself against any potential financial difficulties you may have. Remember, being prepared is the number one way to protect yourself.