Build Your Financial Safety Net

No matter how careful you try to be, an unexpected financial emergency can spring up out of nowhere, and turn your whole life on its head. You might be in a pretty stable position right now, but what would you do if you suddenly ran into a financial emergency? Are you insured against life’s many curve balls? Do you have a cash reserve to cover surprise expenses? No matter your situation, it’s essential to have some kind of financial safety net to fall back on. Here’s how to start building yours…

Start an Emergency Fund
When it comes to building a financial safety net, you need to have an emergency fund at the very least. The best financial advisers in the business advise that you should have around six months’ worth of living expenses kept in an easily accessible bank account in the event of a sudden loss of your job, illness, or similar emergencies. You should keep it in a savings account or another type of liquid account, ensuring that you can use it without any kind of penalty if and when you need to. If you don’t have an emergency fund to fall back on, you may be forced to cover a surprise expense using a credit card. This, of course, can carry a heavy interest rate with it, making your situation even worse. In an even worse scenario, you may have to tap into your retirement assets just to make ends meet. If you haven’t started an emergency fund already, then this needs to change right away!

Get Long-Term Disability Insurance
No one really expects to become disabled or suffer from some kind of chronic illness. However, this is a very real possibility, and one which you need to protect yourself from. Long-term disability insurance will be able to replace your income if and when you’re unable to work due to a sudden illness or injury. A lot of people think that insurance like this is more of a luxury than a necessity. Still, if you don’t have any healthy investments, or other financial recourse you could tap into if you’re unable to work, long-term disability insurance should be a given. If life pulls the rug out from under you, it could save you and your spouse from having to sell off your valuable property, or you having to reach out to a personal injury law firm like SiebenCarey. A lot of modern employers offer this kind of insurance through a pay deduction, which may be tax deductible depending on other factors. Even if you’ve been told you automatically get disability coverage through your work, it’s also important to find out if you have any further coverage options. At the end of the day, if a serious illness or injury would cripple your income as well as your body, you need to ensure you have disability insurance you can rely on.

Get Life Insurance
Sorry to keep bringing the mood down! Again, most of us don’t spend a lot of time considering our impending deaths, but it’s tied to an important part of your financial safety net that needs to be considered. When you pass away, you’ll finally be able to stop worrying about money. Your spouse and kids, on the other hand, are a different story. If you have any dependents who will suffer financially in the event of your death, then life insurance is absolutely essential to mitigate the hardships they’ll have ahead of them. Just as you’ve provided for the people you love through life, getting life insurance will ensure that you continue to provide some degree of security and comfort, even when you’re not physically around. If you don’t have any financial dependents, then life insurance isn’t absolutely necessary. However, a lot of people get life insurance policies and use them as part of their cash accumulation and estate planning, regardless of whether they have dependents or not. Whatever your situation, you should look into life insurance, and find out what having or not having it will mean for you. Find out about the differences between term, whole, and other forms of life insurance, then do a little forward planning to figure out how greatly you need it.

If you’ve left yourself completely open to the various financial disasters out there, I hope this post has helped you formulate a plan to build your financial safety net. Obviously, no one wants to have to use emergency resources, but when life throws you a fast one, it’s important to have them in place.