Increase the percentage of your savings
This one is a no-brainer. To prepare for further emergencies you must upgrade your savings plan. If you usually put away 10% of your monthly budget away for savings, make it 15% or even 20%.
Develop a system on how to cut out unnecessary expenses
Simply saving up by cutting out take outs, coffees and giving up cigarettes can only take you so far. Having a system prepared ahead of time for emergencies such as accidents, losing your job requires a more organized and cutthroat plan. So figure out what unnecessary service or bill you should drop that would help you take your plan further. Say a gym membership you never use, a cable connection you hardly watch, a subscription you don’t find useful. Even an expensive vacation you
Disaster-Proof Your Property
Now you might think, “Hey, this would actually be an extra expense instead of saved up money”, but having your home protected from disaster now saves you from even costlier damage repair expenses after disaster strikes.
Start It Now
Once you have your emergency fund plan set up, don’t just wait around for Christmas. Start it as soon as you can. Build that fund for your future.
Protect yourself with insurance
To avoid having your financial well-being overturned by unexpected events, it makes sense to have adequate policies to cover you and your loved ones. Key types of insurance to consider include:
- Disability insurance — An illness or injury that prevents you from working for even a few months could wreak havoc on your finances. That’s where disability insurance comes in. Disability insurance policies typically replace only part of your income (usually 60%). So you might also want to consider supplemental disability insurance, which could help cover the gap.
- Home insurance — Homeowners are usually required to have insurance by the bank that holds the mortgage. Renters should have coverage, too, for their own personal belongings in case of fire or theft. Also, make sure you’re covered for personal liability if someone is injured in your home.
- Life insurance — When figuring out how much you need, think about how much your beneficiaries would need in order to replace your income and for how long they might need it. Include things like caring for an older family member or college tuition for your kids in your planning. Though all families’ needs are different, a general rule of thumb is to have life insurance equal to 7 to 10 years of income.
- Health insurance — If health insurance is available through your workplace, consider signing up for it since it can be helpful in covering expenses if you were to have a serious medical emergency.