A Guide to Protecting Your Finances

Posted July 21, 2020 by in Lifestyle
money on a table

Money isn’t everything, and it certainly isn’t the only source of happiness, but it can cause a lot of anxiety if you run into financial difficulty. Protecting your finances not only means keeping your money and income on track, but it also means protecting yourself from any long-term repercussions or stress.

Here are some of the best ways in which you can handle your finances in a better way:

budgeting

Create an Emergency Fund

In order to avoid spiraling into debt, emergency funds are ideal for financial assistance and protecting you (and your money) in unpredictable circumstances. Without a bulk of backup cash saved, you may have no choice but to pay for emergencies on credit cards or through taking out a loan. 

Emergency funds help you to keep stable financial security, and can always be topped up at any time. They also help to bring more peace of mind regarding your finances, so that you never have to worry about how you’re going to pay for something should an emergency arise.

Place Your Money in Various Accounts 

Issues can happen at any time with your main bank account. This could be: 

  • ATMs broken or unusable 
  • Online banking running into errors 
  • Your bank having problems with your account 
  • Cyber criminals gaining access to your bank account 
  • Your bank card being lost or stolen 

When any of the above occur, this can cause major problems if all your money is pooled in one account, and this happens to be the account you cannot access, or else is accessed by the wrong people. 

To better protect yourself, store your money in various places, so that you always have something to fall back on. Keep physical emergency cash in your home. Open various bank accounts to separate your income into savings and outgoings. Store a certain amount of money in a less accessible account (such as an account you have to physically go into the bank to access rather than through online banking). 

This can help in making your money less vulnerable. 

Gain Professional Advice Regarding Unexpected Circumstances 

The unknown can have a detrimental affect on your finances and income, because you simply can’t prepare for it. The current COVID-19 pandemic is a prime example of how working situations and a stream of solid income can easily change in the blink of an eye. It’s important, therefore, to protect yourself through legal advice from those who can best direct you and your circumstance.

Seeking worker compensation attorneys can help to protect your income should the worst happen, whether a workplace injury, personal benefits and help understanding Employment Law. 

Don’t Buy Anything You Can’t Afford Outright 

Or, at the very least, anything you can’t afford to pay off within a month or two. If you are constantly buying things on credit because you can’t afford the upfront cost, then you are going to be racking up repayments. 

Not only does this mean added interest, but if something happens to your finances down the line (such as a pay cut or even job loss) then you aren’t going to be able to afford the repayments, which means debt trouble and further finance concerns. 

When considering a purchase, either work out the feasibility of buying outright or wait and save up the desired amount so that you can make a one-time purchase without the worry of long-term repayment commitment. 

Pay Your Bills First 

At every pay day, work out the exact amount of money you need to pay all your outgoings, even if they are not coming out until the end of the month. This way, you can ensure that all necessary outgoings are accounted for, and can then better understand how much money you have left over for other spending. When you’ve reached the maximum of this amount, you know that the rest of the money is for bills. 

This will eliminate the risk of overspending and accounting for your bills last minute, only to realize that you’ve already spent money which should have been assigned to your outgoings. 

Seek Financial Advice

Not everyone is confident enough to keep a handle on their finances, or perhaps you feel as though your money is in too much disarray and you don’t best understand how to get back on track. Seeking professional financial advice for your accounts may be a help to you, such as from a financial advisor or even from your bank. 

Your bank in particular may be able to offer a range of options for you and your money based on your needs and your credit history. 

They will also be able to offer advice on situations of debt, if you feel as though it has become overwhelming. 

Don’t Neglect Your Credit Score 

A good credit score is always going to work in your favor. This can help you to achieve more with your money, and have access to a greater number of possibilities which rely on credit. It’s important to understand how credit score calculations work, however.

It may seem a positive thing if you’ve never had a credit card or loan, but this means that you haven’t had the opportunity to prove that you’re capable with credit. It is much better to take out a credit card, for example, and keep your spending to a minimum (such as $5 a month), but always repay your money on time.

This will help to build a good reputation of your ability to use and maintain borrowing methods. 

Be Sensible Regarding Your Employment 

A lot of job positions are a lot riskier than others. Furthermore, jobs which are difficult or which you are unhappy in can lead to impulsive decisions, such as leaving before you have found new employment. 

When it comes to your means of income, it’s important to balance out happiness with the means to pay your bills. If you have to take a pay cut or lose your job altogether, then your lifestyle and outgoings will need to account for that (which is why it’s even more important to avoid taking out excessive credit or building debt). 

Read more: