4 Things That Can Derail Your Finances — And How to Manage Them

That you never know what might happen is part of the fun of living. Alas, it’s also one of the downsides, too. While you might unexpectedly win the lottery or claim an inheritance from a long-lost relative, it’s also possible that you might get hit by an out-of-the-blue experience that has a less positive impact on your finances and your investment portfolio.

You can hope for a lottery win. For the rest? That’s all about planning and knowing what to do should they happen to you. In this post, we won’t provide next week’s lottery numbers, but we will deliver some tried-and-tested tips for ensuring you don’t get caught out by the less pleasant surprises. 

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Losing Employment

No one wants to lose their job, but in an age when a ‘job for life’ no longer exists, it’s always a possibility. Simply recognizing that you could lose your job, regardless of your role or how important you are, will allow you to take precautionary steps. It’s advisable to have around 3 – 6 months of living expenses tucked away in an emergency fund, which you can call upon should you lose your job. You can also speed up your journey back into employment by keeping your resume up to date (and continually adding skills), as well as maintaining your professional network. 

Experiencing an Injury

Even seemingly innocuous injuries can have a long-lasting impact, not just on your body, but also on your finances. Recovering from an injury can be expensive, especially if complex treatment is required or if you need to take time off work. How you approach managing the financial repercussions of an injury will depend on how the injury occurred. If the injury wasn’t your fault, then injury lawyers like those at https://www.rginjurylaw.com/ can help you to fight for the compensation that you deserve. If it wasn’t anyone’s fault, then your emergency fund can help tide you over until you’re recovered. For longer-term injuries, it can be worthwhile pursuing Social Security Disability Insurance (SSDI). 

Divorce

Divorce is stressful for many reasons that stretch beyond the impact on one’s finances, but there’s no doubt that it can have a tremendous — and concerning — impact on an individual’s financial situation. In the immediate aftermath of the separation, it’s recommended to create a strict budget until you have a better understanding of how the assets will be divided. As with experiencing an injury, this is a situation where working with professionals is highly recommended. A good divorce lawyer will help you fight for what’s yours, allowing you to focus on moving forward knowing that the important tasks are being taken care of professionally. 

Lifestyle Inflation

Most people think that getting a raise is automatically a good thing, but that’s not always the case. If you’re directing the additional cash towards your savings account or investment portfolio, then it can be. If you’re using the money to fund an increasingly lavish lifestyle, then it could be dangerous, making a fall in income more difficult to handle. If you get a raise, play it smart and use the money the right way.