As we all know, life can be unpredictable and no one knows what may happen next year, next month, or even tomorrow. Financial crises, poor investment decisions, or an overly extravagant lifestyle may undermine your financial situation. These six tips will help safeguard you from financial ruin and let you create a cushion against hardship.
1. Don’t overextend yourself financially.
It’s always best practice to manage your debt rather than allowing it to manage you. If you notice yourself in situations where your spending habits outweigh what you’re able to pay off, or just having a difficult time paying your month to month bills, then consider curbing your spending patterns down to a level that is more manageable for you financially. Think, maybe you spend too much on things you don’t need? Perhaps, there is a decent alternative to expensive things and services? Extravagant spending patterns are potentially red flags to upcoming financial problems.
2. Utilize employment benefits to the max.
Many employers offer benefit plans that, when properly taken advantage of, can be worth their weight in gold. Medical and dental insurance and even profit sharing are becoming more commonplace practices among larger companies as a way to retain loyalty, reduce turnover, and increase productivity. Be sure to utilize these benefits as they can substantially reduce out-of-pocket expenses in addition to lowering future tax liabilities. If you’re currently stuck in a lower paying position offering little or no benefits, consider the help of a job placement or resume writing service to kickstart the process of moving up the corporate ladder.
3. Consider getting health insurance.
Insurance no doubt will increase your expenses even more. Then how can it save from financial problems? It’s simple, if any trouble happens to you, instead of paying hospital bills from your own pocket, an insurance company will pay them for you. Of course no one wants to think about bad things happening to them, but we’re not immune to diseases and accidents. In countries where there’s no free medicine, health insurance will save you from potential hefty debts. It’s great if insurance is provided by your work, but if not, then it’s better to pay a little every month rather than risk being broke.
4. Choose Your Bank Wisely.
Many people don’t give it much thought, but bank fees bite off a significant portion of the family budget every month, especially if you happen to have a loan. Before signing a bank agreement, you should carefully study all the details, specifically what’s written in fine print. There may be hidden fees or sky-high fines if you don’t pay on time. If you don’t have the best credit history, most banks automatically offer more expensive loan rates. In this case, it makes sense to opt for second chance banking with reasonable rates despite previously having a less than perfect financial history.
5. Save money for a rainy day.
Everyone understands that saving money is a good idea, but not every person sees the right opportunities. Meanwhile, there are countless ways to put aside some money each month for those “just in case” situations. For example, you can open a savings account and automatically deposit into it with each paycheck. The most important thing is that this money is not too easy to access so that you don’t have the temptation to spend it.
6. Don’t trust questionable ventures.
Quick enrichment with minimal effort — isn’t that what each of us dreams of? Unfortunately, more often than not it’s just a pipe dream. If you’ve fantasized of riches from the internet, or a friend has pitched to you “the secret” for making easy money, take this information with a grain of salt. Because it’s more likely than not, it’s just another shady financial pyramid / get-rich-quick scheme. Is the opportunity to earn a few dollars worth the risk of losing everything? If you wish to invest some spare money, it’s better to contact a reputable broker or purchase government bonds. Profits may not be big, but the risks are going to be way less.