Financial Security Be Prepared

  As long as people live, consumption will not stop. But even in the golden period of life income, everyone will face interruption of income at any time due to disasters, diseases, and accidents. How can we be prepared for the possibility of asymmetric inflows and outflows of cash?
  As long as people live, consumption will not stop, but income will stop, and most people’s income is only concentrated in a certain time of life. In the financial management industry, there is a chart called the “straw hat chart”, which reflects this situation. A person, who has no ability to make money before the age of 18, will retire at home in his sixtieth year, and in the short decades in between, if he can earn enough living expenses, car and house expenses, childbirth and support expenses, and pensions, it will undoubtedly be every Personal pursuit of happiness.
  But this is not the case. Especially in recent years, the multiple outbreaks of the new crown pneumonia epidemic have affected the economic income of many families, and it has also sounded the alarm for everyone who is used to a stable life. So, if the unexpected happens to you, are you financially prepared to deal with it? Do you know how to be prepared?
  Keep enough emergency reserve as needed The
  family ‘s emergency reserve is based on the monthly expenditure of the entire family, and a fixed amount of funds is set aside as a budget to deal with risks, such as illness, accidents, unemployment, etc.
  Generally speaking, this fixed fund is the expenditure of a family for 3 to 6 months, but in practice, how many months of expenditure need to be reserved depends on the specific situation of the family. For example, the expenses of a single person only need to meet the needs of one person, so the consumption is easy to control, and it is enough to keep the expenses for 3 months; if it is a husband and wife, both of them have stable jobs and income, then the probability of both being unemployed at the same time If it is very small, you can set aside the reserve according to the total expenditure of 3 months; but if there are sick elderly people who need to be taken care of at home, it is recommended to consider leaving a few months more for living expenses. For another example, if the family has a full-time father or mother, and the whole family has only one source of income, the risk of income interruption will be much higher for such a family, so it is safer to leave enough living expenses for more than 6 months.
  Setting aside an emergency reserve is only the first step. The second step is to consider how to keep the money. First of all, it is necessary to consider whether the storage method is flexible enough, that is, it must meet the requirements that it can be accessed at any time as needed. Bank demand deposits are the safest method that best meets the above requirements. However, the current annual interest rate of demand deposits is only 0.3%, that is, a demand deposit of 10,000 yuan for 1 year can only get 30 yuan of interest. Therefore, the second point about how to save this money is that you should consider the benefits of flexible deposits, such as choosing a “baby-like” money fund product or a bank’s cash management product. For example, Yu’ebao’s current 7-day annualized rate of return is 1.77%, China Merchants Bank’s Chaochaobao’s 7-day annualized rate of return is 2.68%, and China Construction Bank’s Longbao’s 7-day annualized rate of return is 2.38%. These products not only With the flexibility of demand deposits, and the benefits are higher than demand deposits.
  Planning for Income, Consumption, and Debt
  Household income and spending are the best indicators of financial health. If the monthly consumption expenditure is less than the income, then the funds will have a balance, so that the cash flow is positive, and the finances are considered to be in a healthy state. So, how do we maintain this healthy state? The following 3 points are important.
  The first is to control consumption, starting from calculating daily expenses, including rent, mortgage, meals, travel, social interaction, etc. The more you spend each month, the greater the financial stress that comes with it. Therefore, the key to controlling consumption is to live within our means, and to control expenditure by means of bookkeeping, budgeting, and mandatory savings.
  To achieve throttling, the second thing to do is to open source and increase the source of income. In addition to better completing your own job and getting a promotion and salary increase, the way to increase your income can also consider developing part-time jobs and investing in financial management. Investment and financial management should be determined according to your own financial situation, and you cannot ignore the existence of risks in order to pursue high returns.
  Debt is a disgraceful thing in the eyes of many people, but financial experts often say that proper debt is a state of financial health. Debt can be used to help create wealth when cash flow is needed. A typical example is a home purchase loan. Many people worry that the monthly mortgage pressure will be too high, and they will try to make more down payments or even use up all their savings. In fact, after buying a house, you will still have many places where you need to use money, such as paying taxes, decoration, daily expenses, etc. This fear of going into debt and not leaving slack can lead to new financial stress. In fact, a home loan is the money that everyone can borrow with a lower interest rate and the longest term in their lifetime, and should be used reasonably when buying a home.
  Do a good job in safeguarding measures Developing a safeguard plan
  for your family is an important means of preventing financial risks. Insurance certainly can’t prevent the risk from happening, but it can defuse the financial problems that the risk brings. Insurance is like a patch. Each patch has corresponding loopholes. The most important point when purchasing insurance is to find suitable patches for loopholes and block those loopholes that have a small probability of occurrence but can cause huge economic pressure.
  Medical insurance is insurance used to reimburse the cost of medical treatment. The proportion of medical insurance claims in social insurance is relatively low, and many examinations, treatments, and medicines are not covered by reimbursement, which leads to a large amount of out-of-pocket expenses other than medical insurance when seriously ill, and even returns to poverty due to illness. Commercial medical insurance makes up for it It’s this bug.
  Critical Illness Insurance is an insurance in which the insured can directly receive benefits after being diagnosed with a critical illness. Although medical insurance can deal with general medical expenses, major diseases require years of treatment, which will affect personal work and income, and generate rehabilitation costs, which will bring new economic pressure, and critical illness insurance can play a role. The role of compensatory income and payment of rehabilitation costs.
  Accident insurance is an insurance that pays compensation for death and disability caused by an accident. Its value and function are similar to that of critical illness insurance, mainly compensating for income and paying for rehabilitation expenses.
  Life insurance is a product that will pay claims in the event of death or total disability due to various reasons such as natural, accident, disease, etc. It is especially important for the income support members of the family, because once they pass away, it will definitely affect the parents’ pension, children’s education, and family loan repayment. Wait. And life insurance can leave a sum of money to their family, and it is also their last responsibility for the family.
  For ordinary people, real estate is the most important part of family assets. If it is damaged, the loss will be huge and irreparable. Homeowners insurance is an insurance against this risk.
  Finally, there is liability insurance, which is mainly used to pay for injuries caused by personal actions to others. For example, the third-party liability insurance in auto insurance is used to pay for personal injury or property damage caused by a car accident to a third party.

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