Wealth Connexion explains how you can prepare your finances for life’s unexpected surprises.
Life can often throw unexpected challenges that can be financially straining. Thus, it’s important to understand how to be prepared for these sudden changes. Having a robust, clearly planned strategy is the best way to secure your future and land back on your feet after a setback. As financial planners in Brisbane, we have provided 5 useful strategies for preparing your finances for the unexpected.
Build and Maintain an Emergency Fund
Having an emergency fund means that when an unexpected cost comes up, you won’t have to enter into unnecessary debt, or put aside your long term financial goals. Putting some money from each pay aside into an emergency fund is a wise step in being financially prepared for sudden, surprise expenses. By creating this safety net, you can maintain your financial stability without derailing your progress towards a secure future.
Secure Appropriate Insurance Coverage
Every individual’s situation is different, and you need to choose the right insurance coverage for yours. To do this, think about the possible challenges that could arise — anything from your house getting flooded, to the car breaking down, or legal expenses. For example, if you live close to the Brisbane River, it is important that your insurance covers flood damage. If you need assistance in securing appropriate insurance coverage, contact Wealth Connexion: your financial planners in Brisbane.
Create and Stick to a Budget
One of the most effective strategies for preparing for the future with your finances is to create an effective budget. Creating and sticking to a budget reduces the risk of frivolous spending and helps you stay on top of your finances, so when the unexpected happens, you can assess the situation and recover quicker. A local financial planner can help create the most effective budget for you.
Reduce High-Interest Debt
When faced with an unexpected and costly incident, existing debts will only add to the strain on your finances. To combat this, avoid taking out high-interest loans and pay off any pre-existing, high-interest debt quickly. Treat it like removing a splinter—it hurts for a while, but it means less pain and injury in the long-term.
Diversify Income Streams and Invest Wisely
Relying on a single stream of income isn’t the wisest choice when financially planning for the unexpected. For example, your job could cut your hours, your pay might not keep up with inflation, or you could be laid-off. Investing and creating a secondary income stream can go a long way in supporting your finances when your primary income stream is negatively affected. However, be wary of unwise investments such as high-risk investments, multi-level-marketing schemes, and get-rich-quick scams.
If you are unsure of an investment, seek the advice of a financial planner. As financial advisors in Brisbane, Wealth Connexion has many years of experience in planning for the unexpected. If you’re preparing for sudden changes, securing insurance, diversifying your income, or just want to get a budget in order, contact our financial planners today.
