When it comes to personal finances, good management of your money and proper control of your spending will give you some peace of mind. There are several important things to consider when you want to successfully tackle your debt and improve your financial health. Here are a few that we think are important.
Protect yourself against the vagaries of life.
When we are young and healthy, we usually do not think about situations that could cause us to lose our autonomy, and would jeopardize our ability to earn an income and ensure our daily life. Yet no one is immune to illness or an accident.
Without protection against these events, you can be exposed to debt very quickly. This protection can take the form of disability insurance or an emergency fund, ideally a combination of the two. Thus, the emergency fund could be used to cover unforeseen expenses of the first days, the time to be able to submit a claim to your insurer.
Subsequently, the amounts paid by the insurer may be used to replace income, in part or in whole, depending on the terms of the contract, and therefore allow you to concentrate your efforts on recovering your health. Take the time to assess whether the coverage offered is suitable for your situation and purchase additional insurance if necessary.
It is also important to have sufficient life insurance, a will and a power of attorney relating to your health care and finances. This is all the more important to ensure, in the event of death or major incapacity, that your wishes are respected and that your loved ones do not find themselves destitute.
Live within your means.
It is more and more common today to live from one paycheck to another. Even though this practice is widespread, it is nonetheless risky, because, as mentioned in the previous point, when a major unforeseen event arises, you expose yourself to debt and the deterioration of your financial health, among other things.
Living within your means means taking your income into account to plan your expenses . Setting up a budget and updating it regularly helps ensure that you don’t lose control of your finances. An automatic savings plan is also a great way to save money for later, without having to think about it every day.
Pay your debts.
Most consumer loans come with sometimes very high interest rates. The credit card , for example, show an average rate of 19.99%, and the balance is payable 21 days. Having a strategy for paying off debts, starting with the ones with the lowest debts, is often recommended. By doing it this way, you will be able to enjoy the gratification of seeing your first debt paid off, and you will have the motivation to keep going.
Pay attention to sales contracts.
Remember that before signing a sales contract, you must take the time to read the conditions of said contract. Pay attention to the “fine print”. They often contain the penalties for breach of contract and other conditions that could cost you dearly if you are not prepared.
Meet a professional.
If you are in debt, it would be wise to consult a financial recovery advisor before things get worse.