How to Prepare for a Financial Crisis
Unforeseen circumstances such as an illness, a car accident, a job loss, or a pandemic can quickly lead to a financial tragedy that can keep you awake at night. Since no one can ever predict a money crisis, it’s extremely important to be prepared for it. Thankfully, with the help of qualified financial consultants in 07663, a personal financial crisis becomes less threatening.
Tips to Help You Prepare for a Financial Crisis
Don’t Forget Any Information for Account Access
If an emergency hits you, you’ll want to quickly gain access to your assets and cash. For this reason, make sure that you know your account numbers and passwords.
If you don’t remember the information for account access, it’s best to work out any kinks by calling the appropriate financial institution now.
Take a Money Inventory
You have to know what money is coming in and going out by keeping track of your monthly expenses, including the amount of money you owe and the minimum payments on your debts. You’ll also want to know how much money you’ve managed to save and exactly how much of it is liquid.
Eliminate Unnecessary Expenses
Once you’ve taken a money inventory, you’ll have to come up with ways to cut unnecessary expenses to help you save money for emergencies. Start by purchasing generic brands whenever you can, canceling subscriptions you don’t use, cutting your cable, or cut your gym memberships if you can manage to exercise for free.
Pay Off Your Debts
Did you know that you’ll end up making 106 payments if you pay the minimum amount due each month for charging $1,500 on your credit card with a 19% interest rate? This means that you’ll pay a whopping $889 in interest which you could’ve used as a buffer in an event of a financial crisis.
Since high-interest debt can pile up in a snap, it’s best to come up with a debt payoff plan for your personal loans, student loans, auto loans, and credit card balances. This can help you get your money back in your own wallet.
Be sure to pay off the high-interest debt first while making the minimum payments on the rest of your debts. Doing so will cause you to keep your accounts in good standing while protecting your credit.
Automate Your Savings
Unless a financial crisis hits, you have to resist the urge to dip into your savings. Automating your savings is the easiest way to make sure that you’ll get to save money every month.
If you get your paycheck on the first of each month, you can request a recurring transfer from your checking account to your savings account on the fifth of every month. Before you do so, be sure to avoid over-drafting the account by ensuring that this transfer amount is within your budget limits.
Creating obstacles for withdrawals can be an effective way to save money. For instance, you can keep your savings at a different credit union or bank. Financial experts recommend keeping your emergency fund in accounts that offer a higher interest rate, such as a money market account (MMA) or a high-yield savings account.
The team of financial experts at 1879 Advisors is ready to help you manage your hard-earned money. Contact us today to schedule your appointment.