Simplifying your personal finances is not just consolidating your bank and investment accounts or automating your personal finances to make them easier. A key step toward simplifying your personal finances is to prepare your finances for the unexpected things that can occur in your life. Don’t say it will never happen to you. You never know what can occur. Its always better to be prepared than unprepared. Being proactive and prepared is necessary to simplify your personal finances.
Having a plan in place to handle any financial emergency will enable you to take immediate action when the unexpected occurs. Instead of spending your time wondering what to do, you will already have a plan of action so you can spend your time and energy executing instead of planning. Being prepared you usually will spend less time dealing with situation as well as spend less money. Its also better to plan ahead when emotions will not influence your decisions. Having a plan in place to deal with the unexpected will help you simplify your personal finances and enable you to be financially prepared for whatever is presented to you in your financial life.
Here are 5 things you should put in place to prepare your personal finances for the unexpected as well as help you simplify your personal finances:
Emergency Fund – you never know when something will happen. Having a well established emergency fund can really help you simplify things when the unexpected occurs.
Proper Insurance -having adequate insurance to cover medical needs, natural disasters, and property damage will help you reduce the financial impact on your personal finances. If not insured properly you may place yourself in a financial bind.
Multiple income sources – having additional income sources, you can handle a sudden job loss or other financial impact easier.
Job loss plan -a must have even if you feel your job is secure.
Death plan – have a will in place as well as life insurance will help your loved ones manage your finances upon your death as well as make sure your family is taken care of even if you are not there to help.
Take action now by reviewing your current personal finances and determine which of these plans you do not currently have in place. Then develop a plan to make sure your finances are prepared for the unexpected. At minimum you should have an emergency plan and proper insurance in place.
What have you done to prepare your persona finances for the unexpected?
Remember to take one step at a time to develop a simple financial lifestyle so you can live the financial life you always dreamed of.
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