Thursday, February 8, 2018

Those Who Fail To Prepare, Prepare To Fail

We’ve all heard the familiar advice to prepare for the future. However, we’re rarely
told how to actually prepare. Should we be saving money? If so, how much?
Where should we save it? Should we buy or rent a house? There’s so much
information on so many different topics that it can be difficult to navigate the minefield.
Below are just a few ways that you can prepare for your future and sleep peacefully at

Worst case scenario
The first thing you should do is cover yourself for the worst case scenario. Doing this
is rarely a fun exercise as conversations are usually quite morbid, but they are essential
to help you plan for the future. You should seek the services of some
life insurance brokers to make sure that should anything happen to you, those who rely
on you will not be left struggling. Life insurance can also help to cover the cost of any
funeral arrangements, which can be more costly than you might imagine. Separate to
that, you should also make sure that you have a legally binding will on record. You may
not have much to give away now, but it is always good practice to have a will laid out,
especially if you have a spouse or large family. Having a will set out can help to eliminate
any arguments that might occur about who deserves what and how much. It could be
something as simple as leaving everything to one person, which is fine. But you should
make sure that you have left them everything in a way that is legally secure.

No plans for the future would be complete without a pension scheme. Of course, most
people have pension plans offered to them by their workplace. What most people fail to
realise though is that in many instances, employers will match their employees’ voluntary
contributions up to a certain amount. You may have a compulsory contribution of 1%, but
by bumping it up to 2 or even 3% you are not only putting double the amount of money into
your pension fund, but you are also getting double the amount of free money from your
employer too. The logical thing to do is put as much money into your pension scheme
as you are allowed, and definitely take advantage of any employer contributions they
may have.

Emergency Fund
The best laid plans of mice and men often go awry, so it makes sense to prepare for
when things aren’t exactly going your way. Your car may break down and be in need of
a new gearbox or engine rebuild, your washing machine may decide that it would rather
spill water all over your kitchen floor, or your boiler may decide that it’s seen one winter
too many and just stop working. When things like these happen, it can be a costly and
sudden price to pay. It makes sense to have a decent sum of money stored away to
cover any unforeseen bills that may crop up. You should also prepare for if you suddenly
lose your job too. Usually you are given notice, but sometimes outside influences can
mean that there was no warning whatsoever that your job was in jeopardy. Replacement
work may be hard to come across straight away, especially if you work in a niche field.
You should aim to have enough money set aside to cover all your bills for at least three
months (but preferably six months). This way, even if you do lose your job and struggle
to find a suitable replacement quickly, you don’t need to panic that your house will be
repossessed due to missed mortgage repayments.

Diverse Portfolio
Almost everyone who wants to earn a little more money has dabbled with
stocks and shares. However, there is one key piece of information that you should always
bear in mind when trading: A diverse portfolio is your best insurance policy. Buying stocks
is very similar to gambling, there is potential to earn big, but also to lose big. You should
always look for ways to minimise the risk that you are buying into. Do not invest solely in
oil and gas companies, or pharmaceuticals. Having money in several different industries
means that should anything happen to one section of the market, you can minimise your
losses due to the fact you don’t have all your eggs in one basket, so to speak.

There you have it, a few simple tips to help you plan for the future and be the kind of
person who is always prepared.

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