Financial Protection Tips That Work
Remember all those times your grandma told you to, “hope for the best but expect the worst”? Well, it turns out this little piece of advice wasn’t her just her mumbling nonsense or being a melodramatic downer because it is actually super sensible. We know that no one wants to spend their time thinking about the worst case scenarios and financial protection, but it could be the thing that saves your bacon.
Accidents happen, the unexpected unfolds and emergencies crop up. That is just part and parcel of life and the only you can do about it is to be prepared. This is the only way you can truly protect yourself whatever the storm may entail.
So, without wasting any time telling you just how important it is to be on the ball, here are the best ways to protect yourself from the kind of unexpected occurrences that could hit your finances harder than a Tyson uppercut.
There is so much an emergency fund can be used for and so much that it needs to cover. It could be a dishwasher that dies on you or a fridge-freezer, maybe even your car decides to pack it in. It could be that you lose your job.
All of these things happen to people and that is where an emergency fund can keep you afloat while you figure out what to do next. As a starting point, we recommend you try and tuck away $1500, but the end game should be enough emergency cash to cover three months worth of living expenses.
There is no better way to protect your financial world from being uprooted and hurled into disarray than to take out insurance policies that can protect you from the unexpected. This means taking out a disability insurance policy to protect you from an illness or injury, in which you should also look at protecting your finances with a personal injury attorney.
You should look at taking out home insurance to protect your investment and your belongings. Two other important policies include life and health insurance, both of which will protect your family in the event of the unimaginable happening.
It is imperative that you don’t add on any more debt than you have to. With that said, having access to some form of credit should an emergency strike could help you ride out this rough patch a lot more smoothly. Just because you have a credit card doesn’t mean you have to use it, but it could be the financial protection you are after should everything suddenly hit the fan.
Your best bet on this front is to look for a credit card that has a low annual interest rate and, should you have to use your card for some reason, make sure you start paying it back as soon as you possibly can.
Avoid Your Retirement
It can be extremely tempting to tap into your 401(k) when things go south. And getting your hands on cash that way. But to do this could seriously jeopardize your financial protection in the long run and ruin your retirement goals. For example, if you borrow money from your 401(k) then you’ll end up owing interest back, and that could be at quite a high rate.
What’s more, if you withdraw funds from your 401(k) before you turn 60 years old then you will be slapped with an additional 10% tax on top of the income tax you already pay.
We don’t like to think bad things can happen but they do so I hope these financial protection tips help you to prepare for the worst and hope for the best!