How to manage your finances to prevent emergency situations

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The wisest way to manage your finances is to prevent situations that require emergency funds. Systematic planning and habits can help you prepare for financial crises.

Establishing an emergency fund is paramount. Financial experts recommend setting aside at least three to six months' worth of living expenses. By consistently saving around 10% of your monthly salary and creating an emergency fund account, you can handle unexpected expenses without borrowing. It's best to keep your emergency fund in a savings account or cash account with flexible deposits and withdrawals.

You need to manage your income and expenses by keeping a household account book. These days, there are many convenient household account book apps that automatically record and analyze your credit card usage. It's important to identify your fixed and variable expenses each month and reduce unnecessary spending.

Budgeting is also essential. You can use the 50-30-20 rule, which allocates 50% of your income to essential expenses like housing and food, 30% to leisure and optional expenses, and 20% to savings and investments. Adjust this to your own circumstances and manage your money in a planned manner.

It's also important to protect yourself against risks by purchasing insurance. Basic insurance, such as property damage insurance, whole life insurance, and cancer insurance, can help prevent significant expenses due to illness or accidents. Excessive premiums can be a burden, so it's important to maintain an appropriate level.

It's also important to manage your credit regularly. It's important to keep your credit card usage within 30% of your limit, always pay in full, and never default on payments. Maintaining a good credit rating will allow you to secure loans with favorable terms when you need emergency funds.

Regular financial checkups to understand your assets and liabilities, and setting and implementing financial goals are the foundation for a stable financial life .