As this year has shown us, life entails many unexpected twists and turns. While we cannot prepare for everything life throws at us, there are notable steps that can be taken to help protection yourself and your family from unforeseen events that may leave pose financial risks.
Save For a Rainy Day
An obvious method to protect yourself from future financial risks is to have a considerable amount of cash put aside in savings. These funds can be used as a short-term solution to remedy unforeseen events such as loss of employment, urgent medical bills and any other financial burdens that were not expected. A savings account also provides high liquidity and flexibility which is highly beneficial if you need to quickly access funds.
Building a strong savings account can be as simple as setting aside a small portion of your income each week dedicated for unforeseen events. Understanding your cash flow will help improve your ability to save It is important to note this is not a long-term strategy and should be utilized as a temporary fix.
Consider Income Protection Insurance
Income Protection insurance is intended to replace a percentage of your monthly income if you are unable to work for a period of time due to injury or sickness. This is intended to cover your day-to-day living expenses, so you are not left high and dry in the event you cannot generate an income. Income Protection Insurance helps provide you financial peace of mind to focus on what’s more important – your recovery.
It is also important to consider the level of Income Protection cover you may already have through your superannuation account or employer. If your Super fund or employer offers some type of income protection cover, you may still need to apply for additional income protection or another type of insurance cover. This is so in the unfortunate event of sickness and injury your Income Protection Insurance is providing you sufficient payments to keep up with your day-to-day living expenses.
Choosing the right insurance policies can sometimes be challenging and confusing so it is essential to consult with your financial adviser before picking an insurance policy. As always, the team here at Wealth Depot would be more than happy to help with your insurance needs.
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Diversify your Income Sources
Financial diversification is one of the most reliable risk management strategies. Having multiple income streams may lessen the financial burden if one income is temporarily or permanently lost. Income streams can come in many forms such as rental income and portfolio dividends. Additionally, these passive forms of income may not be lost if you are unable to work as they are generated autonomously.
Review your Potential Risks
Whilst the financial side of retirement is obviously important, it is just as important to highlight the change of lifestyle and how that can affect you emotionally. Traditionally, retirees experience a ‘honeymoon’ phase when they initially retire. During this period, retirees can enjoy all the luxuries of retirement such as travel, hobbies, and relaxation. It is also common for retirees to experience emotional lows due to a lack of routine or the change of lifestyle. These emotions are perfectly normal and vary from individual however it is important to be aware of your mental state. The team here at Wealth Depot care about you mental well being and recommend seeking out help if you are experiencing these emotions.
Making a Budget
While it may sound simple, making and more importantly, sticking to a budget is a great way to protect your cash flow and preserve savings. Budgets help you priorities what is essential and what can potentially be reduced from your expenses so when the unexpected happens you know exactly where your savings or insurance benefits need to go towards. Additionally, budgets could also improve your ability to save and build up a cash buffer as short-term protection for unexpected risks.
Our Wealth Portal website is structured to help simplify the process of mongering your cash flow so you are more likely to stick to your budget.
Risk protection is very important during such volatile periods and whatever your strategy may be, it is important to have some plan in place for when the unexpected happens. If you feel like you are your protection against financial risk is not where it should be, the team here at Wealth Depot are here to help to improve your financial situation.
– Insurance Watch Website