8 Ways to prepare yourself for a financial crisis from beforehand

Profile Picture
By: MarieGarcia
on 6th Apr,2011

Is the thought of a financial crisis makes you awake all night? Sometimes, you hardly can do anything to stop the event from occurring.
8 Ways to prepare yourself for a financial crisis from beforehand

Is the thought of a financial crisis makes you awake all night? Sometimes, you hardly can do anything to stop the event from occurring. Even if you are a dedicated employee, you may have to experience a job loss in times of economic recession. However, you can always prepare yourself to fight it financially. All you have to do is arrange your finances in such a way that you can overcome an unforeseen financial crisis, be it a job loss or a medical emergency.

Here are 8 ways which you can follow to prepare yourself both mentally and financially to overcome a monetary crisis.

1.    Plan a suitable budget to know where you stand - If you think that budgeting is required only when you want to solve a financial crisis, then you're wrong. You need to plan a realistic budget even when you want to attain your financial goal or prepare yourself for a monetary crisis. Budgeting will give you a clear idea regarding how much money you're earning and what amount you're spending each month. This will help you decide how much you require for your emergency fund. Plan a budget to live within your means and assess on what items you can reduce cost, if required.

2.    Assess and increase your liquid savings - When you want to prepare yourself for a financial crisis, you should assess what savings you can liquidate when you're urgently in need of cash. So, take an account of all your savings, along with CDs (Certificate of Deposits) and other investments whose values don't fluctuate with market conditions. It is not advisable to bank upon investments such as, stocks, ETFs (Exchange Traded Funds), etc. as their values usually fluctuate with market conditions. You should take into account such savings which you can liquidate any moment without having to worry about financial loss.

3.    Pay your monthly bills on time - You should never miss out the dates of your monthly bill payments as otherwise, you'll have to pay late fees unnecessarily. So, get organized from now on as this habit will help you in times of a financial crisis such as, job loss. Moreover, you can save the amount that you otherwise have to pay as late fees. Do you know one late credit card payment every month can make you loose about $250-300 a year?

4.    Try to repay your outstanding credit card bills - Have you ever thought how much money is going towards paying the interest on your credit card bills? If you can repay the debts, then you'll save a significant amount along with reducing your financial obligations, too.

5.    Be mentally prepared to reduce monthly bills - It is quite impossible to welcome a change in your life without a mental preparation. So, be mentally prepared to reduce your monthly bills when required. Well, you can even start adapting yourself to this habit from now on. Check whether you're spending on something which you may not require for the time being. You may make yourself understand to buy it later instead of purchasing it right now only because your financial condition permits you to do so. In addition to this, develop the habit of switching off the lights when not in use. It will reduce the cost of your monthly bills. Developing such habits will also help you overcome your financial crisis (if any) without much worry.

6.    Maintain your assets and try to remain healthy - Remaining healthy can help you reduce your expenditure to some extent. This is because by remaining healthy, you can reduce your medical bills. You should also try to maintain your assets such as, your home. For example, it will cost you much less to replace a couple of woods than getting your house tented for termites later on.

7.    Check the type and amount of your insurance coverage - Buying insurance policies help you save a considerable amount of money. However, you shouldn't buy coverage more than what you require. In addition to this, shop around to check whether or not some other insurance provider is offering similar coverage at a much reduced price.  It goes without saying that if you find one, change your insurer to save money on premium cost.

8.    Check what discounts you are eligible for - When you're preparing yourself for the rainy day, you should check which discounts you're eligible for, which you can take help of, if required. For example, check whether you have any gift card which you can put toward entertainment or sell it in exchange for cash. Do not forget to check the expiry date, if any, on that card. Make sure you use it before the validity expires.

 Apart from above, search for suitable opportunities to earn extra cash. You may get help of this opportunity, if required, in future. So, choose something which you'll enjoy to do and gather necessary information about it. You can even use your hobby to earn an additional amount each month. Though the amount may seem insignificant to you right now, it may help you solve a financial crisis, if required in future.

No votes yet

Page loaded in 0.858 seconds.