Don’t have a financial plan for emergencies yet? These ideas can help you get started.
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Financial emergencies can be quite hard to predict, isn't it? They're emergencies, after all. And the pandemic has made this all the more clear.
But a solid financial plan can help you prepare for these unexpected turns in life.
Don't have a financial plan in place yet? Not to worry. There's still time to draw up your emergency financial plan. And we'll help you get started.
Here are some basic ideas that can get you going on the path to financial preparedness.
Set up an emergency fund
An emergency fund is your golden ticket to being better prepared for the uncertainties that crop up in life.
In case of a job loss, a family health emergency, or even an unexpected major repair to your home or your car, you'll need to have some extra funds that are easy to access. That's your emergency fund for you.
Wondering how much you should save up in your emergency fund?
Well, experts generally recommend that you save up enough to cover your essential expenses for at least six months. But that's just a benchmark, really. If you want to save up more in your emergency fund, you can set up your financial plan accordingly.
And where do you set up an emergency fund?
A simple savings bank account would do. Just make sure it's not an account that you use regularly, because your savings may quickly drain out. It's best to keep a separate bank account for this purpose - one that you will access only in case of emergencies.
Debt can be your best friend - or your worst enemy. It all depends on how much debt you take on. If you have no debt, or if you find that your debt repayment doesn't really affect your finances much, congratulations!
But if your EMIs are making it hard for you to save up for emergencies, you may need to look for ways to reduce the burden of debt. Here are some ideas that could help you.
- Avoid taking on more debt.
- Pay off high-interest debt first.
- Track your expenses and cut off non-essential spends, so you can repay your debt sooner.
- Consolidate your debt and negotiate a lower interest rate if you can.
These strategies can help you pay off debt faster, so you can move more of your savings to your emergency fund, if needed.
Look for sources of extra income
Another way to save up for emergencies is to look for extra income. This can be particularly useful if you're finding it tough to cut costs. There are plenty of ways to earn some extra bucks on the side. Here are some ideas.
- Great at what you do? Got some unique skills? Look for remote work or freelancing assignments that you could pick up on the side.
- Know more than one language? Translating jobs are available by the dozen online too!
- Start your own home business that you could run on the weekends.
- If your office pays for overtime hours, you could tap into this policy and take on some additional work.
- Own a property that's vacant? Rent it out for some steady income.
- Buy an additional income insurance plan - like the ABSLI Vision LifeIncome Plus Plan. You get extra income + a life cover!
Add some liquid investments to your portfolio
If you have some extra funds even after your emergency fund is all set up, why not invest that money in some liquid instruments? Ideally, your investment portfolio should contain a mix of both short-term and long-term investment options.
While long-term investments can help you meet your life goals over the coming years, liquid investments can help you be better prepared for emergencies. Some popular liquid investments you could consider investing in are:
- A recurring deposit
- Gold or other precious metals
- Open-ended money market funds
- Open-ended large cap mutual funds
- Treasury bills
Get yourself insured
Buying life insurance is undoubtedly one of the best ways to take care of emergencies that may crop up in life. That's because life insurance is a product that's designed precisely for this. When you purchase a life cover, you give your family a financial safety net that will take care of them in case of any uncertainties.
Sole earning members or primary earning members can help secure the future of their families by purchasing a life cover. That's because life insurance can help in the following ways:
- If the policyholder passes away during the tenure of the plan, death benefits are paid to the nominees.
- If the policyholder survives the policy term, maturity benefits are paid to the policyholder (except in term plans).
- Add-on riders can give you extra benefits such as critical illness benefits, waiver of premium, accidental benefits, and more.
So, these ideas can help you meet life's financial emergencies easily. The earlier you take these steps, the more secure your future will be. That's why it is important to save up for an emergency fund as early in life as you can. And it's just as important to insure yourself at a young age.
Read next: HOW CAN AN ADDITIONAL INCOME PLAN HELP YOU?
A little bit of added income can definitely cushion the blow of an emergency, isn't it? And an additional income plan is one way to earn some extra income. Want to know more about this? We have a blog that gives you these details.
ADDITIONAL INCOME THAT HELPS YOU MEET YOUR EMERGENCY NEEDS AND FULFIL YOUR LONG-TERM GOALS
That's what the ABSLI Assured Income Plus Plan gives you.
With guaranteed income from this plan backing you up, your financial needs will be much easier to manage.
Plus, it offers loyalty additions too!
ABSLI Vision LifeIncome Plus Plan (UIN: 109N131V01) is a non-linked participating individual life insurance savings plan.
ABSLI Assured Income Plus (UIN: 109N127V04) is a non-linked non-participating individual life insurance savings plan.
ABSLI Life Shield Plan
A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V06
- Choice of 8 plan options
- Cover your spouse under the same policy
- Longer Life cover till age 85
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