5 Steps to Prepare for a Financial Emergency

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If there’s anything that we should have learned from the Covid-19 pandemic, it’s preparing financially for what lies ahead. What surprises us most about this pandemic (aside from the apparent reason for not being able to step outside your home without fearing the virus) is the loss of income for many who have either been furloughed or laid off. Since businesses have closed their doors, for now, many of them cannot shoulder the burden of compensating their employees without profit coming in. Those who suffer the most are the ordinary workers. It’s you who need to face the economic uncertainty of the future.

That’s why you should take this time to look at field marketing organization insurance. Promise yourself that the moment you wake up to the new normal, you’re going to prepare yourself and your family for the next wave of this pandemic. And yes, one of the ways to do that is to prepare financially. Though there’s no foolproof way of making sure your lives will be unbothered by another pandemic, having emergency financial plans in place will help you in feeling secure.

Identify Your Expenses

Know how much you need to spend on essentials. Cut back on the non-essential expenses. Knowing in advance how much you need for essentials and how much you can cut will give you a good image of where you stand financially. Keep track of your expenses for three months. This will provide you with a good idea of where your money is going. Write down your expenses every day so that you can compare each month. Then, divide your expenses into two categories: one for essentials and one for extras.

Start an Emergency Fund

By now, you should have realized how important it is to have an emergency fund. This should be in another savings account that’s easily accessible to you. It should at least cover six months of your full monthly expenses. That gives you enough time to look for a new job and get out of your financial slump. The bigger your emergency fund is, the more prepared you are for a financial emergency such as a pandemic, a health problem, or the loss of a job.

Avoid Debts

savings conceptIf you still have a steady stream of income today, pay as much debt as you can. Try to minimize using your credit card except for essential purchases. Reduce debt as much as you can, so you’re not spending money on interest charges and membership fees. This way, if you see a drop in your income stream, you won’t need to worry about paying your debts from your emergency fund.

Apply for a Credit Card

This might seem counterproductive from the last tip, but a credit card works wonders if you find yourself in an unideal situation. Make sure to find one that has a low annual percentage rate and a credit limit that will cover the most critical expenses during an emergency. Before applying for a credit card, make sure you understand how a credit card works and how to use them responsibly.

Get Insured

Insurance is one way of preparing for life’s unexpected events. May it be unemployment, medical problems, or home maintenance, there’s an insurance that will fit what you need. Check with your insurance agents the most viable policy that you can purchase. Consider the premium and the benefits you’ll be receiving. Also, check the legitimacy and the reputation of the insurance company before signing the contract.

Adjusting to emergencies can be challenging and burdensome. However, if you prepare for them beforehand, you’ll find yourself more confident and assured. Now more than ever, you should realize that it is crucial to be financially responsible.

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