When people think of disaster, they think of hurricanes, earthquakes, tornadoes and so on. But disasters are never confined into one category. There’s one particularly infuriating and painful category of disaster: financial.
Millions of people got their first taste of financial disaster in 2008, when the Great Recession happened. It’s been close to a decade since then and therefore people who have recovered may have forgotten how bad it was. Even people who lost everything in 2008 barely think about the situation.
The Great Recession should always garner attention in life. Think about what you lost in those years. This can include jobs, houses, stock and hard-earned savings. Now, your financial situation might be slightly better. But think about whether your money will be safe against another recession. Can you face another Great Recession, and survive?
Financial preparedness refers your ability to survive the unexpected that can take your wealth away. These “unexpected” situations include personal ones, like getting laid off or larger narratives that are out of your control, like a market-wide financial crisis.
Here’s how you can protect your personal finances against the inevitable:
Have an Emergency Source of Funds
In addition to savings, everyone must have an emergency source of funds. If your car suddenly breaks down, or the roof caves in, or if you suddenly get ill, you will need quick access to money. You may be able to dip into your savings accounts, but this is not ideal in a scenario like emergency house repairs. For these small but very significant expenses, you need to keep an emergency fund ready. Invest in this fund as much as you would in a retirement account. An emergency fund will be your first line of defense against a personal financial crisis.
Invest in Gold
If the economy tanks tomorrow like it did during 2008, what will happen to your retirement account and investments like stock? They will plunge in value overnight, leaving you poorer than 24 hours ago. You may not want to anticipate such a scenario, but you do need to be prepared for it. The best way to save money when the currency value goes down is to invest in gold or any another precious metal. Gold prices go up when currency value goes down. In a case of a serious crisis, having gold in your investment portfolio can hedge your losses. You can consult with special brokers like Lear Capital precious metals on how to get your hand on some gold to save your money in the future.
Have More than One Source of Income
Don’t cross your fingers and hope to keep your job forever. It’s hard to predict what will happen in the future. Do not take your primary source of income for granted. There’s always a possibility of losing it, so you better have a secondary source of income to be properly prepared. You can earn part-time money with many things. You can take on a second job on the weekends, freelance from home or run a small one-person business in your spare time. Whatever you do, it should be able to help you in case of a sudden job loss.
Try one of the above tactics to be financially prepared as well as mentally and physically for the future.