Preparing Your Personal Finances For Every Eventuality: Our Ultimate Guide

At some point in your life, you’ll run into some kind of financial crisis. From a small scale or large, it always helps to have your personal finances in order for every eventuality. Here’s how you can best look after your interests.

How To Budget Yourself And Save

When it comes to preparing your personal finances for any possibility, it helps vastly if you plan ahead as much as possible. For example, before you embark on a personal project, such as revamping a house or buying a new car, you should budget spending.

This means that before you even spend a penny, you should know how much you can afford to pay, but more importantly, how much you are willing to pay. You don’t want to get halfway through a big project to just run out of money. As this not only leaves you without money for bills, but could leave you with a house without windows, for example.

That’s one of the reasons it’s important to save. As if you have money put aside in savings account, you’ll be able to bail yourself out when any emergencies happen, such as a loss of income or a half-built project that needs investment for health reasons.

There are a number of personal changes in your life that can help you save money, from quitting cigarettes to purchasing a cheaper lunch every day. Every little helps with your personal finance and will give you the best chance of protecting your future.

Consider Protecting Yourself

One effective way to help yourself in regards to your personal finance, is to protect yourself with insurance. There are actually a wide range of insurance types that can assist with managing your debt, as well as protecting yourself is something bad was to happen. For example, there is something known as income protection insurance.

Income protection insurance is a service offered by insurers to help you have money set aside for if you were unable to work for whatever reason. Usually, reasons to stop working include sickness or accidents, but can also just include general unemployment.

You’ll be away of SSP, or statutory sick pay, which is a service offered by the government which offers up to £96.35, depending on hours usually worked, when you’re not able to work due to illness. What you may not know, is that self employed and independent workers are not eligible for this scheme, and those that are often find it is simply not enough to keep them going.

Income protection will set aside a proportion equivalent to their salary/income in order to help individuals and families get through tough times. You should consider looking into high quality coverage and compare places, such as with Drewberry. Drewberry allow you to compare income protection insurance quotes at the click of a button, with finances and needs that suit you.

Not only that, but they also have an experienced team that is about building long lasting relationships. You only have to look at their reviews to see that. With this type of coverage in place, you won’t have to worry when ill off work, or if you lose your job unexpectedly, allowing you to focus on getting better and getting back on the employment ladder.

Paying Off Debt

One of the best ways to get ahead of your personal finances, is to pay off your debts when you’re able to. What many people do is ignore their debt when they have money, looking to splash out on themselves instead. Whilst that’s fun to do, it’s good to clear debts when financially able to, so that you’re prepared for any eventuality.

Paying off debt is easy these days, in fact, you can most likely arrange a debt plan with your collector, in order to pay off small affordable chunks each month. This also helps with your credit score, as you’re paying in, and avoiding excess costs.

A better credit score means you’re more likely to be approved for loans and credit cards, as well as being able to apply for higher amounts of lending in general. When it comes to banks and lenders, you should be able to negotiate and be approved for lower interest rates too, as you’ve proved you’re able to pay off credit.

Your credit score will vary between different scorers, in general, the numbers will range anywhere from 0-1000, and the higher number will be considered the better number. Numbers will be grouped together, and categorised into ratings, from bad, poor, fair, good and excellent.

A good credit score is essential when it comes to purchasing a home. In order to qualify for most mortgages, you’ll have to have at least a fair score, but some may require even higher.

Getting Back On The Employment Ladder

One of the main reasons that you may be in a rut of personal finance, may be due to your current employment situation. If you’ve recently lost your job, or been out of work for a while through sickness or any other reason.

If it has indeed been a while, and you’ve got a specific industry that you’ve got experience in or at least want to work in, then you may have to take some lessons in your own time. Even being out of an industry for five years could mean you will need completely retrained and learn new skills.

If you’re feeling tentative about returning to work after a long break, it could be worth getting into some temporary or freelance style of work. This is a non-committal type of work that could last a few weeks or a few months, but gives you a chance to try some work and see how you feel, to gauge if it’s the sort of work you want to do.

Of course, not only does it give you an insight into work life, but will help you financially in the short term too.

Getting Raises And Bonuses

When you are working, consider asking your employer for a raise or bonus if you feel you’ve worked hard enough for one. Be prepared to explain why and the reasons you feel its earned, as they won’t just be handed out for free.

Be aware that raises and bonuses could come with extra taxes put on top, depending on the amount and how much it affects your taxable year, so plan accordingly. Either way, it’s not like you’ll earn any less from this, there’s always a reason to chase more money for your own benefit.

Impact Of COVID-19

You can’t ignore the impact that COVID-19 has had on everyone’s financial situation this year. From loss of job hours, to even being able to save money by working from home. The point is, your financial situation is probably different now than pre-pandemic. So, remember to take that into mind when looking at your financial situation to help plan forward.

Understanding Sources Of Spending

It also helps for you to understand how you’ve been spending that money in the first place. There are a number of apps available that are designed to help you keep track of your payments, from bills to takeaways.

From there, you’ll be able to identify where you’re wasting your money, and be able to prioritise spending and saving methods.

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