In conditions of economic instability, people's incomes and property are exposed to increased risks. How to avoid dangers and protect your financial situation, experts of the
Types of financial risks
It is very difficult to predict the scenario of economic development, especially in crisis conditions. This increases the existing financial risks:
- Loss of income. In a situation of economic instability and sanctions restrictions, citizens risk being out of work or losing part of their earnings.
- Loss of working capacity. An illness or accident can cause a reduction in income, as well as lead to an increase in drug costs.
- Loss of savings. We are talking about the depreciation of money in conditions of high inflation growth.
To smooth out the impact of these risks, as well as to protect yourself, you can use the creation of financial reserves.
How do financial reserves differ from investments
Financial reserves are money set aside in case of unforeseen circumstances. Their main goal is saving, forming an airbag.
An investment is an investment in various assets, instruments in order to increase them. The main purpose of investing is to make a profit. However, it is associated with increased risks and can be used only after the creation of reserves.
The rules of financial literacy state that high-risk assets cannot be used to form reserves: stocks, currency, cryptocurrency, mutual funds. Creating a safety cushion, you can resort to such tools as deposits (https://www.vbr.ru/banki/deposity /) and government loan bonds.
According to the recommendations of experts, the size of the airbag should be at least three times the amount of monthly expenses. Two parts of this amount can be placed on deposit, and one in the form of bonds. This will save money, as well as save them from inflation.
How to create a reserve
In order to create a safety cushion, you need to pay attention to your expenses. You should determine how much money you need per month to cover mandatory expenses: utilities, food, medicines. Optional expenses should be reduced.
To form a safety cushion, you need to try to save a certain amount every month. After receiving a salary, 10-15% of income is recommended to be used to replenish financial reserves.
If there is not enough money, it is necessary to try to reduce expenses and save at least 5% of earnings. In the opposite situation, when income allows, part of the funds can be directed to investment.
How to protect savings
To protect yourself and your savings, you can use other ways:
- Diversification of deposits. To secure your funds, it is better to keep them in different credit institutions. The amount of the deposit in each bank should not exceed 1.4 million rubles. Within this amount, all deposits of individuals are insured.
- Income diversification. Different sources of income will allow you to protect yourself in case of job loss. Try to find additional sources of income.
- Insurance. The insurance policy will help to avoid unforeseen expenses in case of property damage or loss of health. You can insure real estate and life remotely, using an online application.
- Competent budget management. Manage your budget, plan your income and expenses, use the opportunities to compensate for your expenses — cashback and tax deductions.
It is recommended to use these methods not separately, but in a complex way. This will allow you to form a sufficient reserve and protect yourself in case of unforeseen circumstances.
Financial risks: why it is important to have a backup plan and financial reserves - Something like that!
