Financial security is obviously one of the most important aspects of planning for the future. No one wants to be broke in a year or two from now on. Life can be unpredictable. People get laid off, lose money, have medical emergencies, and the list goes on. If, by any chance, you have to face a situation such as this, you would want your finances to be in the best shape they could be. So, here’s a list of incredible steps you can take to secure your finances in anticipation of unpredictable situations:
Investing is an excellent option to gain an almost passive income so your finances always stay stable regardless of what happens. Passive income can protect you against layoffs, debt increments, a dip in regular income and other unexpected financial problems. Passive income may sound like you get free money by doing nothing. Well, initially you do need to put in a little effort to generate passive income. Alternative investments are a great starting point. These—which include real estate, hedge funds, and derivatives contracts—incur little risk compared to many other forms. They are perfect to start a retirement fund, too.
2. Long Term Savings
The best way to keep your money available for future use without losing value is to put it away in a savings account. Many banks nowadays offer high interest long-term savings accounts that are insured by the government. Interest can be as high as 6 percent for certain savings accounts. If you can manage to save up a significant amount of money, you will be earning a considerable amount in APR that you can use in the future.
3. Fixed Deposits
The next best thing to a long-term savings account to increase the value of your money is a fixed deposit. An FD is an amount of money you entrust to a bank that will incur a certain interest quarterly or annually, depending on your preference. Fixed deposits have much higher interest rates than regular savings accounts. The only caveat is that you cannot withdraw money easily. Banks usually require at least a month’s notice in advance to cash in an FD. Still, an FD is an excellent option to generate a passive income with little to no risk, or work.
If you are an adult, you are probably doing a full time job. Have you ever considered how secure this job is? No one really wants to think about getting laid off until it actually happens. Layoffs, or even an unanticipated firing, can hurt your finances the most. It’s not easy to find new jobs right away in today’s market. Therefore, it’s always best to have a secondary means of income to support you when the unthinkable happens. You won’t find it easy to juggle two jobs at once. The best option is to freelance, which will allow you to manage time and the amount of work you do as you like, without losing your job. If a layoff or a firing happens, you will always have this secondary means of income to turn to a full-time job right away.
Consider the above options carefully. Some may suit you better than others. In any case, you must try at least one of the above to make you less financially vulnerable on the long run.