Our personal finances are among the most important things in our lives, and the thought of being hit by a financial crisis, such as a job loss, illness or accident, is enough to keep anyone up at night. However, the impact of some huge, expensive, and unforeseen disaster can be mitigated significantly by making sure you’re well prepared for it. Here are some things you can do to prepare yourself against a personal financial crisis…
Plan to Minimize Monthly Bills
You may not have to do it as a matter of urgency, but you should make sure you’re ready to start cutting unnecessary expenses at a moment’s notice. If you have a plan for getting your recurring monthly expenses as low as they can possibly get, you’ll have much less trouble paying your bills when you actually run into a crisis. Look at your personal budget now and figure out where you might be wasting money already. For example, you might be paying a recurring monthly fee for your checking account, which has the same benefits as a bank that offers free checking. There are probably also a range of ways you can trim your utility bills. Knowing where you can save money now can help you massively when disaster strikes.
Revisit your Insurance
Next, scour the market for better insurance rates. If you have too much insurance, or you could be getting the same coverage from a different provider for the same price, there are various changes you can make to trim down your monthly expenses. Having said that, if your insurance covers more possibilities, it can stop one big expense from piling on top of another following a major financial crisis. If a certain kind of financial crisis would mean you’d need a full-blown injury claim to cover the cost of living, it may be time to shop around for some more comprehensive coverage. This applies to policies you already have, as well as any that you don’t have, but may need in the future. For example, a disability insurance policy can be extremely handy if you sustain a major injury or illness that takes you out of work, and umbrella policies can give you coverage where other, individual policies fall short.
Maximize any Non-Cash Assets
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Making a point to stretch out all your non-cash assets can also be a great way to mitigate the impact of a sudden financial crisis. Perhaps you have frequent flyer miles you can use when you need to travel, surplus food in the house that you can use for meals to lower the cost of groceries, or gift cards that you can sell and redeem. Many credit cards also offer rewards which you can use to minimize the impact of a financial disaster. These are just a few examples of non-cash assets that you may be able to liquidate in order to lower your living expenses when disaster strikes. Take stock of these now, and consider any ways you can maximize your existing non-cash assets.