Play It Safe - 5 Ways to Ensure You Protect Your Income

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Life is unpredictable, and even the most carefully designed plans can go haywire if an unexpected event occurs. This is why protecting your income is vital to your financial and emotional health. Here are five methods to secure your finances, no matter how many lemons life throws at you.

Eliminate Debt--

It can be hard to get ahead in life without accruing some debt, but it’s important to know which debt is helping you and which is causing you trouble. Shop around for every loan you take out, including student loans, mortgages, and small money loans. This way, you’ll get the best rates and know what you’re signing up for. 

Create an action plan for how and when you will pay off the debts to avoid feeling out of control of your finances. Pay with cash when you can, especially for things like cars which depreciate the second you drive off the lot. 

Plan Ahead--

You can’t know the future, but you also can’t get what you want without a plan in place. A good place to start is with a six-month savings buffer that can cover your living expenses in case something unexpected happens, like a layoff or an accident. This will give you ample time to get back on your feet or apply for the assistance you need without bills rolling over and forcing you into debt. Only 61% of Americans could pay for even an unexpected $400 bill. This is astonishing but can easily be avoided with an emergency fund. 

Next, establish financial goals. Paying off debt could be one. Investing the right amount of your paycheck to retire by your target age could be another. By planning, you are able to feel cushioned if things make a turn for a worse. 

Budget--

To protect your financial progress, you have to think of your income as a bratty child and you as its overbearing parent. Make it your business to know where it’s going and what it’s doing. You’ll never know if impulse buys and random expenses are causing you to spend more than you make if you don’t evaluate the numbers and ensure they line up in your favor (to learn more about how to make a budget and why it’s important, click here).

Create Multiple Streams of Income--

To protect your income, you might want to avoid putting all your eggs in the same proverbial basket. If you were to be laid off, what would be your first step? You could apply for unemployment benefits, but this can be a long process in which you aren’t guaranteed help. 

By establishing other streams of income, whether it be investment dividends, real estate, or even a good side hustle, you’re able to relax if one stream dries up as you know you can just put more effort into growing the others. Even passive incomes that start small can give you peace of mind when the fan gets hit.

Regularly Reflect on Your Goals--

By revisiting your financial goals, you’ll be better able to see the progress you’re making toward them. You can then reevaluate your spending habits and debts to see if you can attack them more aggressively or lean back while in a season of higher bills. To protect your income, you need to know if your expenses are getting too high, and that is done by revisiting the handy-dandy budget.

No one likes to plan for things to go wrong, but we know disasters happen. These can include company closures, accidents, and recessions. To protect your income, practice these five methods, and remain confident about the future, come what may.