No one can know what the future might bring. A person could win the lottery, or could face another recession. Yes, the future is unpredictable. That’s why it’s extremely important that the average person takes proactive steps to safeguard future finances. Protecting one’s money is not something only the rich should do. Even if you only have a measly hundred bucks in your bank account, you should do your best to make sure this amount stays the same, or ideally, increases over time. Read ahead to find out what sort of steps that people who are not financial experts can take to protect their wealth for the coming decades:
1. Start Saving
Financial experts cannot express the importance of saving money enough. Remember when you were little? You may have had a piggy bank to deposit precious pennies. If your piggy bank helped you develop a habit of saving, then your financial future looks much brighter in comparison to someone who doesn’t save.
There are two main reasons in life to save: emergencies and retirement. Everyone should have an emergency fund where it is easy to withdraw money in case of a serious and immediate financial need. Examples of a financial emergency include money needed for a lifesaving surgery, or rent in case of a layoff. Money needed for buying gold jewelry for vanity purposes is not a financial emergency.
On the other hand, a retirement fund is a form of long-term saving where you deposit money to be withdrawn in 20 to 40 years in the future. Some people are forced to save for their 401(k). However, people who want to retire comfortably have their own private funds also.
Ideally, a worker is encouraged to save at least one-third of his or her income. However, it’s worthwhile to save even less than this amount. Remember, saving something is always better than saving nothing.
Investing is the best way to make sure that your money increases overtime, and not the opposite. The returns you can get from investments are excellent forms of passive income, which you can later save for a life event or invest in bigger ventures with better returns.
Now, the science of investing can be a bit tricky, especially for a beginner. If you have a small amount of funds at hand to invest, it’s best to find a venture with less risk, like a fixed deposit or a government bond, than to bet your money on something risky like the stock market. It’s important, however, to know that all investments involve some level of risk. It will be your job as a savvy investor to figure out which investments are the best.
Also, when investing, it’s equally important not to put all your eggs in one basket. Invest in different ventures and diversify your portfolio to expose your overall wealth to less risk. For example, you can invest in real estate for high returns at high risk. Also, you should consider buying gold and silver to protect your currency wealth in case of a recession.
3. Diversify Your Income
For most people, working hard at one full-time job is enough to survive on. However, have you considered what would happen if you are suddenly laid off? If you have no income, you will obviously be in serious financial trouble. Therefore, everyone should strive to diversify their income instead of relying entirely on one source. For example, in addition to your main job, you can consider freelancing. In case you are laid off, you can always rely on your freelancing income. Likewise, think about ways to find additional sources of income to protect yourself in the face of financial uncertainty.
Nothing in life is guaranteed. However, if you heed the suggestions above, at least your financial future will be mostly guaranteed to be safe.