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Financial risks: why it is important to have a contingency plan and financial reserves

Financial things be acknowledged for preventing any loss.Meet Stepan (Sample person for explaining for your easy understanding. He learns from his mistakes. Using his example, we will see what problems everyone can face and how to avoid them.

Using his example, we will see what problems everyone can face and how to avoid them.

Risk first. Something happened to Stepan

Trouble at work

Stepan is a successful sales manager. He always carried out the plan and received good bonuses for this. He paid the rent, went to restaurants, had fun on weekends, traveled a lot and did not deny himself anything.One day, the executive reported to the group that he had chosen to shut the trade. Everyone, including Stepan, has been working for the last week. So Stepan was left without a job and a good salary. He had no savings, so he had to give up a rented apartment and look for a new job, sitting on the neck of his parents.

Health troubles

Time has passed. Successful sales manager Stepan was in a hurry to get a new job. An important client was waiting for him, he needed to be impressed. Stepan put on his best shoes, ran out of the entrance, stumbled and broke his leg. The operation could be done free of charge under  compulsory medical insurance , but the doctors recommended an expensive operation that would help reduce recovery time. Stepan did not have VHI, but he agreed to return to work faster. As a result, he went through two weeks within the clinic, and after that another month and a half at domestic.

Stepan’s income for these two months has decreased by more than half. His work experience was short – less than 5 years, so on sick leave he was paid only 60% of his average earnings for the previous two years.

What should have been done?

So that troubles at work (salary cuts, dismissal) or illnesses (your own or loved ones) do not unsettle you, it is important to have a financial airbag. Ideally, it should be equal to about five salaries. Additionally, you need to insure yourself and your life at least against accidents – this way you can significantly reduce the cost of treatment.

Second risk. Something happened to Stepan’s money or property

Since then, Stepan has become smarter: he began to save money and even bought a car. On a September morning, he left the house and did not find the car in the parking lot – it was stolen. Stepan was saved by the fact that when buying a car, he issued a comprehensive insurance policy. Before long he was paid the total sum of harms.

He chosen to contribute this cash within the buy of an flat in a unused building.But later it turned out that the developer was unscrupulous, and the house was not completed on time. For Stepan, this turned into three years of waiting for an apartment and additional expenses.

When the apartment was nevertheless completed, our hero decided to rent it out. Everything was fine: additional income and quiet tenants who agreed to move in without an official contract (this is how Stepan decided to avoid paying tax). One night, Stepan received a call from the neighbors in the same apartment – it turned out that his tenants had flooded them. Arriving at the place, Stepan found traces of the flood both in himself and in his neighbors. The tenants refused to pay the damage, and Stepan was unable to hold them accountable because the lease agreement was not signed. All expenses for the repair of apartments – both neighbor’s and his own – Stepan had to bear.

What should have been done?

In any situation, it is necessary to insure your property and life. Remember that OSAGO will not cover the damage. If you become the culprit of an accident or your car is stolen. Home insurance, like life insurance, is also an important contribution, it is better to insure in advance.It’ll be as well late to nibble your elbows when something happens.Contracts with developers should always be shown to lawyers and carefully studied before signing them. And saving on taxes (as in the case of renting out an apartment) can play a trick on you.

Third risk. Something happened to the economy

Stepan began to be more attentive to his property and money. He decided to save up for his dream car. I installed a safe at home, made a financial plan and set aside money every month. He was already close to the goal when the course jumped sharply , and his money was no longer enough even for half the car he dreamed of.

What should have been done?

Economists recommend not to store large amounts in one currency, but to distribute them proportionally in rubles, dollars and euros. The difference in rates will somehow equalize the amount of your savings. Indeed superior, open a store – the intrigued rate will offer assistance diminish the affect of swelling.At the same time, it is most safe to store no more than 1.4 million rubles in one bank. It is this amount that will be quickly returned if the bank ‘s license is revoked .

How to save yourself from financial risks

There are a few simple rules to follow:

  1. Don’t neglect insurance . A car, an apartment, your own health. And the health of loved ones will be safer if you take care of their safety in advance.
  2. Consider a financial airbag. Ideally, this is five of your regular salaries. There is another way to calculate.Make a money related arrange, figure out how much cash you would like each month, and duplicate that number by six.So you will accurately determine the amount with which you can feel more or less calm.
  3. Use financial instruments. Interest on the deposit compensates for losses due to inflation, cashback cards will help to return part of the money spent. Separately, study the possibilities of an individual investment account . Find out in what cases you can get a tax deduction.

Dua for studying.  At your doorstep. 

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