How To Safeguard Your Earnings?
Published On Apr 22, 2021 12:00 AM By InsuranceDekho
Table of Contents
Majority of the individuals ignore the importance of regular and stable income until they run headlong into a crisis, such as an accident, an illness, a job loss or just plain retirement. It’s only then that the significance of preserving one’s earnings gets the attention it deserves.
How to safeguard your earnings
In order to insulate your earnings from unforeseen, uncertain events and contingencies, consider a life insurance plan that includes protection against accidents, illness or death. There are several protection plans and savings and investment plans, both in the traditional and market-linked segments, which helps in achieving this effectively.
How To Safeguard Your Earnings?
Following are some of the pointers which indicates how to safeguard your earnings-
1. Rein in Inflation
Apart from disasters, inflation is the one of the most underrated destroyers of financial value. Investors must take necessary action to access the eroding effects of inflation by opting for a savings and investment plan that has a fair share of assets like equities that counter inflation effectively.
2. Plan for Retirement
Planning for retirement by way of retirement plans, among other avenues, provides income protection in the later years. Younger individuals who opt for pension get in the habit of setting aside income in their earning years and thereafter preserve their income from erosion and wasteful expenditure
3. Reduce and eliminate debt
Debt in the form of credit cards, personal and business loans, and medical debt can represent a significant amount of the monthly budget. The debt you carry incurs interest which eats up a portion of the monthly debt repayment allocation. A % of each monthly payment made by you goes toward interest.
Reducing debt can liberate a portion of your business or household budget so the funds can be channeled into more important goals such as growing a savings account or investing.
4. Find Passive Income Or Start A Side Hustle
Channeling your current income towards allocating the money in repaying your debt may be one of the fastest and easiest ways to pay down your responsibilities. Consider starting a side business you can run on weekends or evenings to supplement your earnings, or branch out your business. Brainstorm various side hustle ideas, do your market research to find what people need right now, put together a business plan and get started.
5. Have a Savings Fund
When it comes to financial advice, most agree that an emergency savings fund that covers uncertain expenses is a good idea. The pandemic is the perfect example of why the concept always works. Individuals and hustlers that have savings contingency plans are likely to perform better in such a crisis.
The thought behind the concept is easy. Businesses and households which are able to cover at least 3-6 months of expenses can continue to operate and pay their bills for the short term. They are better positioned to control a downturn or unexpected event and come out unharmed.
6. Diversify your Investments
Keeping six month’s worth of savings in a money market or high-yield savings account may be acceptable but not a good idea. The interest earned is minimal but you have access to the cash promptly in an emergency. Larger amount of money should be allocated towards an investment portfolio.
You may also like to read: