What do you do when the big bad wolf comes blowing? If he doesn’t try to get you one way, he’ll get you another. Whether it’s via the loss of your job, an unexpected financial setback in the family or via a reduction in interest rates or an increase in inflation, these are all things that can have an impact in your finances.
One of the aims in life is to reach a stage where you are financially secure; rock solid. In my opinion this involves building a financial house of bricks, solid against the financial weathers of life.
This post will attempt to explain how that can be accomplished
The first port of call in a real emergency such as the loss of a job for example is your savings. So with that being said, it’s good to aim for about 3 – 6 months worth of living expenses, so that if the man turns around tomorrow and points the finger, you can still keep up to date with your monthly payments. A solid bank account with a decent interest rate won’t hurt, but the increase in your cash shouldn’t be the main concern here.
Beat Inflation with commodities
Inflation causes the general cost of goods to rise. In these inflationary periods the value of cash diminishes whilst the value of commodities rise. For this reason you can protect yourself against the wolf by having some in your arsenal. Remember that it’s equally as important to know when to get out.
Health and Home Insurance
Health insurance is also another essential requirement to remain fully protected, just in case. This keeps your financial base rock solid should the worst happen, which may require costly medical care. Home insurance should be taken out for the same reason.
I have heard a lot of debate over whether pension plans are worth investing in. In my opinion it is worth having as another string in your bow. A solid financial plan should include pension contributions so that when you retire funds are available to help you out. My personal favourite however is continual investment into a passive income vehicle such as the purchase of investment homes, something that I am currently studying about.
Maybe a little grim, but life insurance is another form of the wolf that can come blowing. You should be adequately insured to ensure that your family can afford the costs that would rise should the worst happen.
Beat Taxes With Investments
Taxes should be countered with investment vehicles that soften the blow such as a business, or . When you consider that amount of money that is lost to taxes, it’s easy to see why this could be a major dent to wealth creation or even to building a solid financial wall.
So there you have it, these are a few ideas for how you can protect yourself against the big bad wolf by protecting yourself against major financial setbacks. Is there anything I have missed, what do you think? Let me know below!