For all of our planning, there’s an element of unpredictability in life that we simply cannot account for. If you think you’ve thought of every possible outcome, there’s likely at least one you didn’t. Really, the only thing you can predict with near certainty is that things won’t always go as planned. While it might give you pause, this knowledge should give you the power to build a contingency plan that can protect you from the stress and impact of an unexpected life event.
Be it the loss of your job, a sudden illness or an accident, when you arm yourself with even basic financial literacy and a flexible budget, you can get through almost anything unscathed. Start with these three tips to set yourself up for a more secure future.
Build an emergency fund
“An ounce of prevention is worth a pound of cure” couldn’t be more true when it comes to finances. The most preventative step you can take to mitigate the unexpected is setting aside a sum of money for emergencies only. It won’t happen overnight, though. Just like contributing to a savings account, you can deposit a little bit each month to a designated account until you save three to six months’ worth of living expenses.
Explore temporary financial tools
If you’ve found yourself in a tough spot financially without an emergency fund, luckily, there are still options available. A bridging loan, for example, can help you in the short term when you need money fast. If you’re in the process of buying a new home, for instance, and you haven’t yet sold your current one, a bridging loan bridges the gap and can be used to cover the down payment until the money comes in from your sale.
The same principles are applied when you’re facing sudden expenses, like a car repair or medical emergency. In essence, a bridging loan provides temporary relief to address immediate needs until you can secure longer-term financing options.
Review and adjust your insurance coverage
If living life is like walking a tightrope, reliant on taking just the right steps, insurance is the safety net below, ready to support us when we fall. But not all insurance is equal and revising and adjusting your existing policy or seeking a new provider can have a profound impact on the level of support you receive when you absolutely must make a claim. One way to do this is by ensuring that your life, home, health and disability insurance policies adequately cover potential risks. This isn’t a one-time task either. Regularly review your policies and consider additional coverage when your circumstances call for it.
Safeguarding your future
Handling your finances can be a daunting task at the best of times. So when the unexpected crops up, having a plan in place can ease the stress of dealing with it all. Use the outlined three steps to get a jump start on safeguarding your future, but don’t stop there –– these tips are just the first steps on a longer journey to financial freedom.
