Feeling uncomfortable about your financial situation can affect everything from how well you sleep at night to your relationships and focus. It’s common to worry about whether you can pay your bills and what would happen if you were to lose your job. And an unexpected expense might be the difference in whether or not you can make rent that month. So, there are a few questions to ask yourself to determine how well your financial safety net is working.
Are You Diversifying Your Income?
One income stream might be enough to help you pay your bills, but diversifying it is one way of offering a safety net in case something happens to your full-time job. There are many ways of making some extra cash on the side, but real estate is still one of the best ways to build wealth. While it’s becoming more difficult for younger generations to become homeowners, that doesn’t mean you have to miss out on this potentially lucrative income stream. Crowdfunding models are gaining popularity, especially fractional ownership. If you’re wondering whether this option is worthwhile, you can review a guide on everything you need to know.
Are You Saving for Retirement?
If your company offers a retirement plan, ensure you are taking advantage of the benefits. Set aside at least enough to get the full match from your employer, and consider putting aside even more. Even if you don’t get this benefit, you can likely still find other tax-advantaged retirement plans. It’s easy to put your future on the back burner, but if you save now, your future self will thank you. Your life will be a lot easier in the future if you have these funds set aside.
How Would Your Family Be Financially Impacted by Your Death?
If you have dependents or you earn part or most of the household’s income, consider what would happen if you were not there any longer. If you want your kids and spouse to be able to maintain their current standard of living, your income would need to be replaced if you were to pass away. Life insurance can be a great safety net in these types of situations. Having it will give you peace of mind that your family would be taken care of if you were to pass away. Getting a policy can help your family stay in their house.
Can You Pay an Unexpected Expense?
Having an emergency fund can be one of the most important ways of keeping yourself financially secure in case you have a financial emergency. Having money in the bank can make you feel a lot better about your situation, and you won’t need to worry about having to pay for an unexpected expense if you have these funds. However, if you are not prepared for an emergency like this, recovering from it could take longer than the amount of time to create an emergency fund. Therefore, once you make this account, promise not to touch it unless you need it.