The idea of a personal financial crisis can be scary. Nobody wants to think about what they would do if their job was lost or a medical emergency happened, and they couldn't afford the expensive treatments. But it's essential to be prepared for anything. In this contributed post, here are six simple steps that you can take today to prepare for your financial crisis.
Maximize your Liquid Savings
Liquid savings refer to assets that can quickly and easily be converted into cash. It would be great if you tried to maximize your liquid savings, so you have quick access to funds in the event of a personal financial crisis. It could include having an emergency fund, keeping money in a checking or savings account, and investing in short-term certificates of deposit.
Maximizing your liquid savings is one of the simplest ways to prepare for a personal financial crisis. You can invest your funds quickly and easily, which will give you peace of mind, in case of an emergency.
It could include establishing an emergency fund with enough funds for at least six months worth of expenses, keeping money in a checking or other kind of bank account where you can effortlessly access it when needed, and making sure you have emergency cash saved up. It would be helpful if you also were mindful of interest rates and penalties on your savings accounts, as the amount you keep in a checking or other bank account may not earn enough to beat inflation.
Track Your Income & Expenses
Making a financial blueprint is a great way to ensure you have all of your expenses in order and know how much money is going out each month. You'll also be able to figure out a monthly surplus that could go towards building up an emergency fund or paying down debt.
Sell your Annuity
Selling annuity settlements will provide you with an upfront lump-sum payment in exchange for the future stream of income promised by the annuity. You can then use this money to build up your savings, pay off debt or enjoy a higher standard of living while it lasts.
Minimize your Monthly Bills
Your monthly bills are essential things you'll need to take care of, if a financial crisis happens. You can start by making sure that all your monthly bills are paid on time and then work towards reducing them as much as possible. If you have enough savings, we recommend canceling unnecessary subscription services such as cable TV or magazine subscriptions and only keeping the ones that matter to you. You should also consider selling anything valuable so it could contribute some money for covering your expenses during this difficult period - make sure not to sell any valuables at a low price.
Pay Down Credit Card Debt
If you have credit card debt, one of the best things you can do is pay it down. You should make a plan to pay off your debt as quickly as possible. It may require some lifestyle changes, but it will be worth it in the end.
Check your Insurance Coverage
It's essential to make sure that you have adequate insurance coverage in case of a financial crisis. Therefore, you should review your policies and make sure that you are fully protected.
There are several things you can do to prepare for a financial crisis. It would be great if you took some time to think about these things and put a plan in place. If you do this, you will be better prepared than most people when financial problems hit your household.