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3 Ways to Protect Yourself Financially

We like to think that we are financially sound and once you are earning a regular wage, it is easy to make the assumption that you are now set for life. Unfortunately life doesn’t work that way and you need to be prepared to take any curve ball thrown at you.

Sickness, accidents and all sorts of other family problems like redundancy can have a massive impact on your financial stability and so while you should always hope for the best, you should be preparing for the worst. The advantage of preparing like this is that even if nothing ever goes wrong, you will still give yourself a little more financial wriggle room.

There are three basic ways that you can protect your financial interests and you should consider all three very carefully to decide what you need and how to achieve it.

Always Take Out Insurance

Some insurance, like car insurance, is a legal requirement but you need to make sure that you are covered for everything you need. If one day your house burns down, you would really kick yourself for failing to have buildings insurance and contents insurance as you would literally be left with nothing.

Insurance might feel like a waste of money, but when disaster strikes it is your insurance company who will step in and handle things for you. This means that when you choose your insurer, you shouldn’t just look for the best deal, you should also look into personal recommendations for those who will do their jobs best and can be relied upon to pay out.

But insuring your stuff isn’t the only insurance you should be thinking about. No one wants to consider their own premature death, but if you have a family, you need to consider what they would do if you were to suddenly die tomorrow. A life insurance policy will allow those you leave behind to continue in the same lifestyle they had before and if you continue to survive as planned and don’t make a claim, it can always be reconsidered as a retirement fund.

Hire Lawyers to Handle Compensation Claims

If you require a form of compensation for any reason, you are best advised to seek legal council to give yourself the best chance of winning your case. Though you might feel confident, unless you are a lawyer yourself, you are likely to be unfamiliar with the process and could easily miss a detail that could have won you your funds.

Injuries sustained in an accident should always be pursued for compensation claims, especially if you end up losing money to pay for medical treatment or lose earnings because you can’t get to work. Always seek legal advice for your personal injury to see what you can claim for and how much you are likely to win.

Keep an Emergency Savings Fund

If you are earning enough each month to cover your costs, you need to think about starting up an emergency fund. This is a savings account that you pay into each month and can use should anything happen that affects you financially.

For example, if your house burned down, you could use this emergency fund to pay for alternative accommodation until you can file your claim and win compensation. How much you place in your emergency fund is up to you but usually it is around 3-6 months of your usual income. Though it may be tempting, don’t use this money at all unless it really is an emergency.

Though you might feel that your money is relatively safe, you need to make sure that you have the financial equivalent of a safety net to fall into should everything go wrong. Life can’t be trusted to go smoothly so planning for financial disaster is the best thing you can do to mitigate any disaster.

You should always start by insuring the things that are the most valuable to you and never drive without the appropriate insurance policy. Though you may not be able to save any sentimental items, you will at least be given the chance to rebuild your life again without too much hardship if you have the right insurance plan.

Once you are fully insured, build up your emergency fund. This isn’t just for when disasters or accidents happen. The most likely use for this money will be if you lose your job or your monthly income suffers. Having this fund will reduce the amount of pressure on you to keep earning and returning to a job you hate. Don’t use it lightly, but if you wanted to leave and find something better, this money could enable you to do exactly that.