How to Protect Yourself from a Global Financial Crisis

We can try and hide our heads in the sand and pretend like everything is ok, but the writing is on the wall. All signs are pointing towards an inevitable global financial downturn. This was reinforced by a recent monthly survey by the CBI that showed that the retail sector suffered its sharpest drop since the last crisis. However, like in any financial crisis, there are some things that you can do to shield your assets and maintain a certain standard of living during rough times. Here are some things households can do to protect themselves from a global financial crisis.

Royalty Free Photo

Have an Emergency Fund

A recent survey showed that over a quarter of UK households had no savings set aside for emergencies, and that is alarming. If you don’t have an emergency fund already, now is the time you should start building one. It should be enough for you to handle your bills and daily expenses for several months. Financial experts advise that you have at least three to six months’ worth of expenses set aside for a rainy day.

Consider Switching to a Charge Card

If you have multiple credit cards and have a lot of credit card debt, the first thing you should do is renegotiate your debt and work on a repayment plan. You can work to reduce the interest rate on your credit cards, which will make it easier to repay your debt. Once you’ve done that, you should consider closing your smallest accounts and keep your card with the highest balance since credit might be harder to come by during a crisis. You should then consider getting a charge card as well.

Charge cards have many advantages over credit cards. Since you’ll be obligated to pay back your balance each month, it will allow you to keep your spending in check. Charge cards also won’t affect your credit utilisation rate. But they can still help you build your credit and give you access to better rates on loans later. And charge cards like the American Express Platinum card will give you access to tons of perks as well, like travel insurance for you and your family, VIP access to airport lounges on flights, and even free hotel room upgrades among other things. If you want to know more about the card, you can check out this American Express Platinum review.

Protect Yourself Against Bank Failures

If there’s one thing we learned from the last crisis is that no institution is shielded against crashes, and that include banks. Thankfully, the UK Financial Compensation Scheme will guarantee your savings up to £85,000 saved in any account, except with the BS&I, which is backed 100% by the government. However, note that many institutions are under the same umbrella. For instance, the Bank of Scotland, Lloyds, and Halifax are all under the Lloyds group, so you’ll only be protected up to £85,000 on all three accounts. So, make sure that you spread your savings to get the maximum protection and make sure that they’re all independent from each other.

Conclusion

While we may want to stay positive during times of crisis, it’s essential to stay realistic and be prepared for anything. Follow these few instructions and you should be able to weather the storm during these hard times.