Protect Your Money from a Personal Financial Crisis

The problem with a financial crisis is that you never know when it is going to strike. This means that you should be prepared when things are going well, so that you can recover better when they go badly. There are several ways in which you can put yourself in the best position to spring back from a personal financial crisis, and these are just a few of them.

Develop a Buffer Zone

One of the most simple things that you can do to protect your household finances is to amass a decent level of savings. This way, you don’t have to rely on credit or borrowing, should something happen like you lose your job or you are hit with an unexpected bill. As a general frame of reference, it is worth having at least three months’ worth of living expenses in your savings account, but you can take this up to six if you want to be especially prepared.

Make a Budget

Unfortunately, the vast majority of us simply don’t know where our money is going every month because we don’t keep track of it. So, now is the time to write down your weekly and monthly expenses. You may well find that there are cutbacks that you can make, if you are spending excessively in some areas. Minimizing your monthly outgoings is something which you can do regardless of how well things appear to be going at the moment.

Set Up the Right Current and Savings Accounts

In a difficult financial period, you may need to dip into your overdraft. If this should happen, you don’t want to max out on unnecessary fees because your account overcharges you. Similarly, when you put your money into a savings account, you want it to be working as hard as possible for you. You shouldn’t simply stay loyal to a bank, just because you have been using it for a long time if another one is offering you a better deal.

Claim What You’re Entitled To

Perhaps the financial crisis which you are going through is due to a personal injury which is not your fault, in which case you may need an accident lawyer. If you are dismissed from your job in a way which you believe to be unjust, you may find that you are entitled to some sort of compensation. Ultimately, you have to be the one who is pushing for it as no one else will do it for you.

Look at Alternative Income Streams

The final thing that you can do to make sure that you are left in the best financial position in a crisis is to look at the other forms of income out there. Perhaps you could make money from selling your things online, renting out a second room or doing some freelance work on the side. Thankfully, the internet has opened up more revenue stream possibilities than ever before which you can take advantage of.

This post is for educational purposes only.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0