Your number one asset is you. While finances are one of the stressors that we tend to think about, not being able to earn an income because of sustaining a disability, falling critically ill or not having financial safety nets in place can leave you and your family vulnerable.
Take a step towards financially protecting yourself by protecting your ability to earn an income. Here is what you need to know.
Do you have financial goals?
It is easy to get lost in the sea of financial advice when it comes to finding ways to protect your ability to earn an income. Having financial goals will be your guiding point when it comes to any and every financial decision you will make. However, doing this on your own without speaking to a professional such as a financial advisor can end up costing you. Make sure that you have financial goals in place to make it easier for you to find a solution that will match your needs and current financial circumstance.
Protect yourself at all costs
A financial portfolio is created to protect you and your ability to earn an income at all costs. It is also there to help you grow your finances without leaving you financially vulnerable. However, it is crucial to speak to someone who is qualified to help you establish and manage your portfolio to make the process easier for you.
Start with the basics by protecting your stream of income that will keep you financially afloat even when the markets or your job performs in ways you were not anticipating. Make sure that you have your bases covered with things such as a legally recognised will, a life insurance policy, funeral cover and disability cover.
Income protection insurance
What is income protection insurance? Income protection insurance provides a monthly payment to insured workers who are unable to work due to an illness or injury. It will give you peace of mind knowing that your financial responsibilities will be taken care of while you recover. The amount of coverage will typically range from 50% to 70% of your gross monthly income.
Never underestimate the power of saving
One of the simplest—and most effective—ways to protect your ability to earn an income is to save. Savings is simply money that you have set aside for a specific purpose, like a trip or an emergency fund. They can also serve as a sort-of insurance policy against any number of events that might disrupt your ability to work, including illness, injury and unemployment (the last two are often referred to as “disability”).
Savings can also provide peace of mind in other areas: if you decide at some point down the line that it's time for a change in career direction or that taking on more responsibility isn't right for you right now (or ever), having some savings will help ensure that financial stress doesn't get in the way of pursuing opportunities that may be more interesting or satisfying than what you're doing now.
Assessing risk
The first step in protecting your ability to earn an income is assessing risk. This means looking at your finances, employment situation and family situation. You should also consider your lifestyle. Speaking to a financial advisor or planner can help you map your way through a realistic and sustainable plan for you and your family.
