Regardless of economic situation, there’s never a better time for you to start protecting yourself and your family financially. No matter how good or bad the economy will turn out to be, you’ll still need to get up and make a living each day. In this case, you might as well take proactive measures to financially protect yourself and your family in case things get worse. These are the five measures you can take to start protecting yourself and your family financially:
1. Determine needs and wants Most of the time, you might be better off without the things you want. If it’s something that doesn’t yield long-term benefits (especially for your personal finance), avoid it at all cost. This means consumer debts are a huge no, as they will drag you down financially. When deciding to make a purchase, make sure it’s something you truly need and could benefit you in the long run, and not simply what you want.
2. Define what financial security means to you and get expert advice Financial security could mean different things to different people, and that includes you. Start by imagining the worst case scenario: what if you or your spouse (who’s the primary breadwinner) died suddenly? The first thing you’d want is for your loved ones to do well and not be out on the streets. Once you figured them all out, start making plans with a financial adviser.
3.Get yourself and your family insured There are many different kinds of insurance that you can buy for yourself and your family. Naturally those who buy insurance has a mission of protecting themselves (and their loved ones) from disasters, so choose your insurance wisely. There are four major kinds of insurance that you can consider buying, including life insurance (for breadwinners with dependants), health insurance (for everyone in case health problems arise), homeowner’s insurance (for home owners with families), and auto insurance (which is useful in the case of road accidents). Find out more on endowment insurance in Malaysia, including OCBC Bank’s MaxGrowth Enhanced.
4. Eliminate debt Contrary to popular belief, debt elimination isn’t as tricky as it appears to be. To avoid from getting into financial ruin, eliminate outstanding debt as soon as you can. Start by drafting a plan to tackle each debt, and set a time and budget to achieve your goal of paying off each debt. Financial protection, accumulation and distribution will be made easier once you’ve managed to eliminate some or all of your debt.
5. As a rule of thumb, every family should go through these three financial stages: protection, accumulation, and distribution. It’s risky to accumulate and distribute wealth when you haven’t gone through the first and most important part of money management stage, which is protection. Getting through a tough economy shouldn’t be a hurdle if you had prepared and planned carefully and wisely. Make financial protection a priority for the sake of your family and yourself.
Increase emergency fund Start one now if you don’t have an emergency fund. For those who already have one, you need to increase the amount. Your starter emergency fund must have at least RM4, 000 to RM8,000 in it. A sufficiently funded emergency fund should allow you to live safely for three to six months in case bad things happen (i.e. job loss, bad economy, disaster).