Many of us don’t hesitate to insure physical assets such as our home, contents and vehicles, but what about our greatest asset of all – our ability to earn an income?
We all like to visualise a smooth road ahead, but sometimes there are bumps in the road such as job loss, business closures, sickness or injury. Protecting your income along the way isn’t a luxury: anyone with financial obligations should consider making sure they have a back-up plan.
Planning ahead for the unexpected is essential for you and your family’s financial security. You may be surprised at the range of ways you could protect your income. Whilst everyone’s circumstances are unique, there are some steps that you might like to consider to help protect your income and reduce your exposure to financial stress
1. Save for a rainy day
Saving can be an important way to insure yourself against setbacks such as losing your income or unforeseen emergencies. This may be a good back up for short-term or relatively minor setbacks and it’s flexible. You are in control of how much you save. It is a good idea to get into the habit of saving on a monthly basis. You could keep this money in an easily accessible savings or cash account with the best interest rate you can find, so you can access your funds if needs be.
2. Consider Income Protection insurance
Income Protection insurance is designed to replace a percentage of your monthly income if you’re unable to work for a period of time due to sickness or injury. It can give you the financial peace of mind that you may be able to cover your day-to-day living expenses while you focus on what’s more important: your recovery.
One thing to consider is the level of income protection cover you may already have through your employer or your super. If your employer or your super fund offers some form of income protection cover, you may still need to apply for additional income protection insurance or another type of insurance cover, so that in the unfortunate event of sickness or injury, you can protect your financial position.
3. Invest in yourself
Building up your skills could be form of insurance. Developing more expertise and updating your skills in your chosen field makes you a more valuable candidate, in case you need to find a new job due to redundancy. Even if you don’t lose your job or get sick or injured, broadening your skills gives you more career options further down the line whether or not you choose to remain with your current employer.
4. Find ways to boost your earnings
Finding ways to increase your regular earnings may improve your current financial situation and, it could make it easier to save, which means you could be providing financial protection against loss of income or unforseen emergencies. Sometimes it even lets you follow your passion as a secondary source of income. Some people make extra money by taking up part-time employment such as a part-time tutor or coach, others create and sell arts or crafts at local markets or online. With all the opportunities out there there’s bound to be something to suit you.
This information is current as at 16/10/2015.
This article provides an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information has been prepared without taking account of your objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.