Wednesday, December 28, 2011

Be Prepared for a Financial Hardship

Times are getting harder. The recent global financial crisis has made many people realise the importance of getting financially prepared for possible job losses, reduced income, or higher costs of living. Financial hardship is something nobody looks forward to but it could be unavoidable. There would always be economic factors in the country and around the world that could bring about that hardship.
The best way to deal with and overcome any financial hardship is to be ready for it. As the cliché goes, it is best to always save for the rainy days. How could anyone prepare for it? Here are several ways you could do it.

First, live in frugality. It is ideal to be always practical. You may not be aware but you could actually lower your daily costs. You may incur lower electricity bills for instance by getting more conscious about how your household uses appliances and lighting fixtures. To lower your water bills, install faucets that do not leak. As for your grocery, buy only necessary items and avoid the luxuries. There are many logical ways to be practical.

Second, boost your savings. Whatever cost savings you could generate from being frugal should be added to your bank accounts or savings. Allot a significant portion of your regular monthly income for your savings. That money, over time, could be very significant. Consider investing a portion of the total amount so it could grow exponentially. Leaving your savings in the bank is not ideal enough as banks often impose very minimal annual interests on deposits. Try to look at the stock market or at small businesses.

Allocate a personal emergency fund. This should be separate from your savings. This personal fund should cover unplanned and immediate expenses like when your tires get flat, your house requires immediate minor repair, or you get sick. During such urgencies, it would be best not to touch your savings.

Bid goodbye to an extravagant lifestyle. Living in simplicity could be a virtue. It would also help make sure you would be in good financial shape in the long run. It is much better to shift your lifestyle to being simple from extravagant while you are still in a good financial condition than when you have to do so because you have no other option when you get into a financial hardship. It makes sense, doesn’t it?

Lastly, consider getting a line of credit. This would be in case you would need very significant amount of money in the future. The good thing about this product is that you get approval for a loan and get an amount ready for your taking. You would not be charged until you withdraw money from that credit line. Thus, it could be considered a stand-by facility. Intend not to touch it unless there really is a compelling need for you to do so. At least you could rest assured that if you would need cash, you could easily have it no matter what happens.

Andrew has been working in the finance industry for several years and has help many people dealing with financial hardship. Andrew specialises in short term loan and debt consolidation .

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