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7 Financial Emergencies In Life That You Need To Know How To Deal With

7 Financial Emergencies In Life That You Need To Know How To Deal With

You may be surprised by some of the categories included, but when it comes to finances and emergencies the biggest thing between the two is the unplanned. When you make goals, you should include contingency plans and always maintain an emergency fund. When life’s twists and turns arrive, you will be better able to enjoy the ride rather than fear the consequences.

Job Loss – the financial emergency we often encounter first

From our first fast food working days to the jobs we plan to continue throughout our careers, job loss is one of the most prevalent emergencies–and losing a job is an emergency everyone should plan for and plan accordingly. Even a 16-year-old working his or her first job should plan to become unemployed. The reasons people lose jobs vary widely, but a simple plan involves saving at least one month’s pay. Depending on the responsibilities the individual has at the time, saving more money may be necessary. It all comes down to planning to cover the most immediate needs because even when working your first job, you need to prepare to pay your bills if you lose the job.

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Marriage – emergencies occur when combining debt

Believe it or not, marriage can be a financial emergency–especially if you marry into debt. You shouldn’t marry for money, but when you and your fiance (or fiancee) acted irresponsibly with money before you decided to partner for life, you need to plan for impending emergency. The best defense against marrying into debt is not to separate. Instead, make a plan to pay down individual debt and create goals for the short and long term. These goals can include things like paying off credit debt or building credit scores in order to get pre-approved for a house.

Divorce – separation costs more than partnering

The last thing lovers want to think about when marrying is divorce, but this financial emergency is a startling reality for many couples. The best way to plan without hurting your partner’s feelings or giving strength to pessimistic thinking, is to take steps to maintain the relationship. In addition to “planning” for divorce, just planning in general for financial emergency will protect you against this one.

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Natural disaster – financial emergencies ahead

How common are tornadoes, earthquakes or floods in your area? When you buy a house or even rent an apartment, keep the possibility of natural disaster in mind and buy homeowner’s insurance or renter’s insurance. Watching the weather and planning for escape never hurts if you live in an area that suffers disasters often, but in addition to an underground shelter, you can shelter your finances by insuring them.

Bankruptcy –  avoid the biggest financial emergency

Bankruptcy is the cold, hard truth for many who take calculated business risks as well as those who simply enjoy their youth too much. When establishing credit, use the limits as a gauge instead of a hard line. If your credit card allows you to charge up to $5,000, you should keep a balance of about $2,000 at most. How much debt you carry is a calculation lenders consider, and many suggest your debt-to-credit limit percentage should be 30 percent or less. In “planning” for the financial emergency of bankruptcy, remember you cannot write off student loan debt. Keep that in mind if you spend your refunds at the bar.

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Retirement – will you have enough?

Most people who join the workforce intend to retire so they can actually enjoy the money they earned working hard at a career for so many years. The sad fact is that for many entering the workforce in 2014 and the years to come, social security may not exist when retirement arrives. If you fit into a category in which you cannot count on retirement or a pension, make sure to consult a financial adviser and create a plan to investing that can help protect your plan to retire. People live longer now than they did in the past, so long-term-care insurance may be a wise investment to protect what savings you accumulate while working.

Death of a spouse – planning for the hard times

Topping the list of things no one wants to think about is losing one of the closest people to you in your entire life. Apart from a parent, who you expect to lose before you die, and a child, who you never hope to lose before you die, a spouse’s death is purely catastrophic. Not only do you suffer emotionally but also financially. You can plan for death in a similar fashion to planning for divorce, by saving money in an emergency or trust fund. You can also take out life insurance to protect against the financial devastation that comes if your spouse’s income provided the majority of household income on which you need to live.

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In all cases of financial emergency, looking into the future and recognizing the potential for disaster is possible. Insuring, saving, and most importantly, planning are your best calls to action in recovering from any financial emergency–now that you know what the big ones are.

Featured photo credit: morguefile via mrg.bz

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Published on June 12, 2018

How Much Money Do I Need to Retire? Find Your Answer Here

How Much Money Do I Need to Retire? Find Your Answer Here

It is never too early nor is it ever too late to start planning for retirement. It ultimately depends on your way of life, where are you living, and whether you need to let go of anything. A successful retirement strategy is to have enough pay to cover your expenses with a little cash going into a savings account for sudden financial needs.

With regards to retirement, we all have an alternate vision in mind. In fact, some think about traveling throughout the world, while some think of a peaceful life with their grandchildren. Whether we get ready for it or not, we will one day turn to retirement age and so, we should be prepared for it. I’m going to tell you how in this article.

Benefits of early ventures for retirement

The way this works is you figure out where you need to live, the amount it will cost you to live there (rent/food/transportation), and the various expenses you will need to account for, like travel/insurance/medical bills and taxes. Many people are struggling to put aside money for their future savings and some haven’t started yet. Think you can put off thinking about retirement? The reality is that you need to start thinking about it right now, and putting aside some money from today.

There are a lot of benefits of taking early steps towards retirement. Utilize the power of compounding, low investment for targeted corpus and you can create more corpus investing the same money:

  • If someone saves $100 every month and starts investing for 30 years at 10% return, initially you will see that within 5-10 years, your investments will not multiply. However, after that period, the corpus will increase immensely with the impact of compounding. The investment period expands the extent of profits increments in the corpus.
  • Suppose there are two people, one aged 30, and the other 40. Both need to resign at 60 with the same retirement objectives of $300,000 USD each. Both will put resources into an investment with 10% of the return. Thus, to accomplish their retirement objective, the younger one needs to save $100 USD / month and the older one needs to collect $300 USD / month. Since the older one has started investing ten years later than the younger one, he will pay more than double what the younger one will pay.
  • If someone saves $100 USD every month and starts investing at 30 years old till 60 and gets 10% annual return, his corpus becomes around $170,000. Otherwise, if he starts the same amount spending at 40 years of age with the same 10% return, he will have around $57,000 USD. He can profit by just investing ten years early.

You can’t invest too much money in retirement during the early stage of your career since you may have different objectives. However, you can increase the investment gradually if you start investing just a small amount.

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Average retirement age

For many people who are nearing retirement age or recently resigned, one of their most significant financial regrets is that they did not focus on saving for their golden years. As per the Consumer Reports study, it demonstrates that only 28% of investors with the age of 55 years or older are pleased with the way they have saved for retirement.

As per the report, The Economic Policy Institute breaks down how much Americans have put away.[1] Since you know that when the majority of people retire, you can subtract your age from that more significant number and check down what number of more years you need to work.

But many retirees go back to work. Some of them do part time job while others do seek for a second career. Some even come back to full-time work and then retire again in a couple of years. So deciding their retirement age could be tricky.

Average retirement savings

To get retirement started, saving is pretty easy, though it can seem complicated. These simple five steps will make you go on retirement now. So, you don’t need to stress over having the same regrets as today’s retirees.

1. Invest 15% for your retirement

Your initial step is to save 15% of your income. This will depend on your gross income and does not include any coordinating assets you get through your employer’s retirement plan.

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It’s sufficient to enable you to achieve your retirement investment funds objectives, but not too much to keep you from enjoying your income today.

2. Utilize tax-advantaged retirement plan

Yes, we utilized the T-word; however, don’t daydream! Split your 15% retirement contributing budget between charge conceded retirement plans like your 401(k) or after-tax plans like a Roth IRA.

3. Invest your money around

To put it all in one place is the most significant risk that you can take with your retirement money. With mutual funds, however, you can invest in the biggest and most recognizable brands as well as that new organizations you’ve never known about but has a lot of growth potential.

Opt a growth-stock mutual fund with background marked by solid returns for both your 401(k) and Roth IRA speculations.

4. Stay with it

Since mutual fund investing is less risky than investing in single stocks, it is not risk-free. You can see your savings grow in the long term as long as you can leave your money where it is and keep adding to it.

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5. Work with an investing professional

It is essential to look for an investment professional, as you must have a lot of queries concerning your retirement plan during 30 or more years of investing,

Never make due with an investment professional who recommends or patronizes you to turn over all your investment choices to them. Since this is your retirement, nobody will think or care about it more than you do!

You might analyze or compare your savings against the average retirement savings for your age group to check whether you’re falling behind or getting towards of the curve. On the other hand, it might be conceivable to hang up the work boots and hit the shoreline with fewer savings if you live easily or below your means.

How to achieve your financial goals?

An ideal approach to achieve your financial goals is to stay focused on what you need for your future, ignore everything (and everyone) else that may divert you. There’s a significant business culture out there that requires you to stay in debt, live for the occasion and stress over your future later on.

You need to start planning for your future from now, not when you have more time or money to invest. You can even talk to a financial advisor for any help. Cooperate to set your money goals and make an action plan to reach them. You can retire younger than you thought you could if you create a project and follow up on it.

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Start planning for your retirement

A lot has changed in the last 30 years; our previous generation had an career goal and they would join either a large private company or a government organization immediately after school or college. Then they would spend the next 38 years in the same organization and the form of provident fund and gratuity. They would retire with a decent corpus and they would later spend the remaining time with their pension benefits. It’s a bit different now, but with the above information, you’ll be well prepared.

Whether you can afford to retire now or not, you need not bother with a retirement calculator to get a rough estimate. You should have the capacity to closely approximate your daily spending habits to figure out how much money goes out the door every year.

Featured photo credit: Pexels via pexels.com

Reference

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