Unemployment is a fact of life in the 21st Century, and while it often means reducing outgoings, it does not have to mean financial disaster. The key to minimising the impact of any unemployment situation is to be prepared for it.
Unemployment – Assume You Can Be Made Redundant At Any Time
The idea of having a permanent job in the current work place is just wishful thinking. It simply means that an employer has to follow certain procedures before an employee’s contract can be terminated. Because of this, everyone should consider what solid financial plans should be put into place in order to protect the family finances against whatever life throws at them. In the current economic conditions, the possibility of unemployment has to be taken particularly seriously. Other potential issues include illness or accident, critical illness and death. Of these, illness and accident have additional implications. As well as protecting your income, you also need to think about planning for additional costs as a result of illness including the cost of additional care. While your family may be able to help look after you, it may be necessary to pay for more specialist care or treatment.
It Is Critical To Understand Your Current Financial Situation
You probably already exercise a certain amount of money management and will have a good idea of how your personal money is spent. The next step is deciding what is essential spending and what can be cut out if needs be. Essential spending is anything necessary to keep you and your family sheltered, fed and clothed. That’s it. Everything else is discretionary.
Of course, some items of discretionary spending are more important than others. Mobile phones, for example, may be massively useful, even if they may not be strictly essential. These types of outgoings can be given a higher priority if it becomes necessary to reduce expenditure. When you look at the income that comes into the household, it is vital that you ensure that your essential spending is protected as an absolute minimum. In addition to this the key items of discretionary spending would also benefit from being covered. It then becomes a matter of judgement and cost as to whether you increase your level of protection to less important expenses. While discussing these issues with your family is a good start, it would also be beneficial to seek some professional advice on the matter.
Income Protection Can Take The Stress Out Of Life’s Challenges
Just knowing that you have prepared for life’s knocks can make them easier to deal with. It allows you to focus on dealing with the event itself rather than worrying about where the money will come from. There are two main types of income protection insurance. One is Payment Protection Insurance, which is intended to cover repayments on a specific debt, such as a mortgage, loan or credit card. This cover pays out in the event of unemployment. It may also pay out in case of illness. The other is Income Protection Insurance, which provides an income to be used as the recipient sees fit. This type of cover typically pays out in situations of accident or illness. Some policies also cover unemployment.
Instead of just focusing on protecting your income, it can be good to get some advice on your overall situation. This can help to get your money working smarter and harder. It may also help you stop worrying about unemployment and start living.