There are many reasons for loss of income. While a good rule of thumb is to set aside six month’s-worth of salary to cover life’s unexpected moments, many of us aren’t hitting this target.
Warren Sumner, assistant branch manager at the Cloverdale branch of Envision Financial, a division of First West Credit Union offers these strategies to ensure you’re well equipped to weather the storm of lean times:
Focus on savings
If you’re down an income, review your budget, cut out any frivolities and stick to it. For the first six months put as much money as you can in savings to build some financial security in case of another emergency—even if it’s only a nominal amount.
Start a home-based business
Consider starting a home-based business, even on a part-time basis, to help you generate income and create potential to write off expenses associated with a home-based office. Contractors, for example, can allocate part of their salary to an administrator on their taxes.
Look at your tax structure
Speaking of tax right-offs, an expert can help you maximize every single dollar through your current investments and new tax bracket. Likely there are efficiencies to be made and tax credits to take advantage of.
Using your credit cards or dipping into that line of credit seems like a temporary fix “until you get back on your feet,” but it’s not advisable. These products have interest charges, some as high as 19 per cent, and debt can quickly become out of control.