Not many of us are prepared to face the curve balls that life throws at us as is apparent from the COVID-19 crisis. Here are tips to deal with major financial crises.
You may be comfortable financially for now, but when a financial crisis comes knocking at your door, it can snatch away your wealth and peace of mind leaving you high and dry.
Financial troubles can hit you at times when you are least expecting them. Most of us live in the moment and worry about saving for milestones in the future like children’s education, retirement etc. But not many are prepared to face the curve balls that life throws at us disrupting our plans and throwing our financial stability into turmoil.
We have listed down five major yet common financial crises that one faces in life and shared wise tips on how you can prepare yourself to deal with them. Let’s get it started:
Ailments
Health is wealth. But, as we grow old, our wealth increases and our health takes a toll. There are various illnesses and ailments that creep into our body with age. While you are busy planning your future, an unexpected illness can strike you or your loved one, leaving you in an emotional as well as financial turmoil.
Heart attack, high blood pressure, diabetes are some of the most common age-related ailments that can throw your finances in disarray. Fatal diseases like cancer are becoming more common these days too. To deal with such unexpected illnesses, one needs a lot of dough for medical care. And if you are living hand-to-mouth and have no money for such circumstances, then it is a very serious case of financial crisis that can push you into an abyss of debt.
Pro Tip: We believe in the saying, ‘Prevention is better than cure’. So instead of taking loans or breaking your investments, the best way to deal with this financial crisis is buying a good Health Insurance policy that covers for medical expenses incurred due to common age-related ailments.
Make sure that your medical insurance covers your spouse, kids and parents as well. A Health Insurance policy not only takes care of your health but also saves your wealth.
Additional Reading: Managing A Credit Card On A Low Income
Layoff
It is all hunky dory in terms of financial stability till we have a job that pays us well. But it doesn’t take long for things to change as layoffs are becoming quite common in numerous offices across the country and the world. Recession that hit our economy in 2008 made thousands of people jobless. The IT industry, which is the major job provider in the country, took the worst hit as many techies were fired overnight. A similar layoff wave is taking over India and the rest of the world with the recent pandemic as well.
Loss of job can throw your life in disarray as you are clueless about how to pay for bills, utilities and basics without the constant flow of money. It is one of the most common financial crisis which people tend to overlook thinking it can’t happen to them. And then life happens, often stumping us with uncertainties.
Pro Tip: The best way to deal with any financial crisis is to be prepared for it well in advance. In order to shield yourself from financial hardships due to loss of job, one must build an emergency backup fund that can help you with your day-to-day finances for 3-6 months.
Investing in a Fixed Deposit or Recurring Deposit is a great way to ensure that you have a financial backup in case of loss of income. Also, find an alternate source of income by using skills that you are good at.
Untoward Incidents
All of us believe in building assets and often invest in cars, gold, real estate etc. But what if your asset gets stolen or damaged? The number of cases of theft and robbery where valuables like car, gold etc. have been stolen has been increasing over the past few years.
There have been numerous instances of destruction of property due to fire or structural instability. And yet, we don’t take precautions to safeguard our assets and fall prey to financial crisis due to theft and loss of property.
Pro Tip: Learn from others’ mistakes and safeguard your property and assets by taking various types of property insurance. If you own a car, then a Car Insurance is a must to cover your losses in case of theft or damage.
Similarly, invest in home insurance as it will save you a lot of money in case of damage due to fire, floods, etc. You can thank us later!
Additional Reading: Crucial Money Lessons The Yoga Way
Accidents
Life on earth is prone to accidents. Despite all the precautions and safety measures, accidents happen time and again and are unavoidable. Be it a road mishap or an unfortunate occurrence at work, accidents can lead to serious injuries that might require immediate medical treatment and long-time medical care. In some cases, it can lead to permanent disability or even death.
And yet, most of us think that we will never meet with an accident and leave ourselves unguarded against mishaps and financial crisis that follows it. Fatal or not, accident injuries require medical care which is expensive. And since you can take a while to recover, you are left with no income due to loss of pay. And, if you don’t have money to take care of medical treatment as well as household finances, then you’d find yourself in a pickle.
Pro Tip: Instead of running from pillar to post for loans at the time of urgency, it is better to invest in advance in accident insurance and personal insurance that covers your medical treatment at times of unfortunate mishaps.
Also, having a Car Insurance policy helps to claim for the damages occurred to your car during the accident. And to deal with the no-income situation, invest in money growing schemes like Mutual Funds that can be liquidised easily during emergencies.
Financial troubles can attack you at any time and the best the way to face them is to be prepared for it. Apart from following the money tips that we shared to safeguard yourself from financial crisis, clear your debts and indulge in cost-cutting to save more for the rainy days.
Now, why don’t you go check out some financial products?