If the pandemic has taught us anything, it’s that having a financial safety net is an absolute necessity. There’s just no way to predict what life can throw at us, whether it’s a once-in-a-century disease, a round of job losses, or a family emergency that puts a strain on finances. When something like that happens, an emergency safety fund can be a lifesaver.
Building an emergency fund isn’t something that happens overnight, but with a bit of discipline and knowledge, you can set up a healthy financial safety net that can help you ride out any difficult situations you might face. Here are a few things you need to create a reliable financial safety net!
Healthy Emergency Savings
Setting aside a good amount for savings can help you get past any financial difficulty because it keeps you from having to rely on credit cards and avoid credit card mistakes when things get tight. Ideally, you should have about six months’ worth of savings in your emergency safety fund to allow you to ride out any difficulty in finding a new job.
In the current job market, it might not be tough to find a job, but it can be tough to find the right job for your needs. Having a healthy financial safety net can help you wait for the right job, as opposed to having to take anything that comes available just to get money coming into your account.
Long-Term Disability Insurance
Hopefully, you’ll never have to rely on this, but if you end up becoming disabled because of injury or illness, getting a dependable disability insurance policy can ease the burden on you or your family. Disability insurance is a vital part of your financial safety net because it gives you an extra layer of protection in case you’re unable to work because of something that didn’t happen on the job. If you’re injured on the job, worker’s compensation will usually cover you. However, if you’re injured elsewhere, either you’ve got to have a good long-term disability insurance policy or think of getting emergency cash loans for rent payments.
If you have anyone else who depends on your income, such as dependent children, a quality life insurance policy is an essential part of your financial safety net. The younger you are, the easier it is to get a life insurance policy, so if you don’t have one yet, adding one is a must to create a truly healthy financial safety net.
Much like with disability insurance, you hopefully won’t have to count on this policy until the end of your working years, but should the worst occur, your loved ones will be financially protected.
You can never predict what’s going to happen in life, but you can prepare yourself by making sure that you’re financially ready to deal with the worst. By building a healthy financial safety net and making sure you have enough emergency savings, you can ensure that you can survive a financial crisis and come out the other side in good shape!