We live in uncertain times. Bad things are happening left and right, and now more than ever, people need to prepare for the worst-case scenario. It’s important to start getting your finances in order as soon as you can because it’s impossible to predict when the worst could happen. It may seem unlikely, but it’s better to be prepared than to be caught with your pants down and take a hefty financial blow that could be difficult to recover from.
It’s not enough to just put money away for a rainy day. You need to take action to ensure that if you suddenly find yourself without a job—or the worst-case scenario: you pass on—that your family will still have something to fall back on. With that in mind, here are a couple of key tips to help keep you and your family financially safe and secure.
The average U.S. citizen spends $10,000 a year on health care. Health care is one of the biggest reasons millions of Americans are struggling with debt even before the pandemic began. On top of your other existing debts, is your family financially stable to take on a medical emergency? While COVID-19 tests are free for all Americans, hospital bills aren’t. And people without health insurance can expect to pay up to $75,000 out-of-pocket, assuming that your recovery takes only six days in the hospital.
If your employer doesn’t provide you with health insurance, get some from a private provider. It might seem like just another bill to pay, but it will pay dividends if you ever get sick. If you have dependents, also consider getting life insurance. Life insurance is there to ensure that your family stays provided for if you pass on. And it will also allow them to recover from the sudden loss of income without having to incur debt.
It might seem morbid to make plans for when you’re gone, but it’s essential to ensuring that your family remains secure in the event that you pass on. Consult an estate planning attorney and get them to help you make arrangements. They aren’t just limited to drafting wills; they also handle trust funds and estate taxes. And they protect your assets to ensure that your surviving family members will get what they’re due.
It helps to keep a close record of what your assets are. Make a portfolio or a spreadsheet, and keep the physical copies of your documents somewhere secure at home. But it will also be good to have copies stored somewhere else so that if you lose your home in an accident, you won’t lose those important documents, too.
Track Your Spending
There are many apps today that can help you track what exactly you’re spending money on. Some of the more sophisticated apps even allow you to link them to the balance of your bank account so that you can monitor your balances all in one place. Do your best to budget your money and make every penny count.
While budgeting can seem like a difficult prospect, it’s not as hard as it seems. There are many plans for budgeting available online that you can reference. You just need to find the plan that you’re comfortable with and that works best for you and your circumstances.
Tighten Your Belt
Even if you’re one of the lucky few who haven’t felt the sting of the pandemic on the economy, it helps to cut back on unnecessary expenses. Order takeout less often; don’t shop around on Amazon for things you don’t need. Put that extra money away in a savings account with a high-interest rate so that you get the maximum benefit from it just sitting around.
If you can speak to a trustworthy financial adviser, do so. They can give you useful advice on what to do with your money and help you grow it passively. As nice as having savings is, after a certain point, it might be better to use the extra money to invest and acquire more assets to help you make even more money. The more diverse your sources of income are, the better off you’ll be.
Watch Your Credit
As tempting as it may be to purchase things with your credit card, be careful. Although banks are currently offering more lenient payment arrangements due to the ongoing situation with the pandemic, it’s worthwhile to review the terms of your credit cards to make sure that you know exactly how much interest you’re paying every time you swipe.
If you do have a balance on your card, do your best to clear it out as quickly as possible. While it might seem like a good idea to just pay the monthly minimum fee, keep in mind that interest can accrue quickly and sneak up on you. Always keep a close eye on your balance. Make sure that the interest doesn’t start spiraling out of control so that you can avoid taking on debt you can’t pay off comfortably.