Risk is something that is associated with each and everything in life. It does not matter whether we are into business, market, corporate, student and other profession. However, the financial risk is the biggest one for everyone in life. The financial hardship and the risks are tough to battle but common in life. One can expect that at some point or the other, the financial risk would come in front. However, the trick is to accept the challenge and prepare for it well in advance. This is generally termed as the Financial Risk Management. However, this is not something that needs analysis and discussion. This is the basic of all financial management and quite easy to follow as well.
Save rather than Expense
The proportion of money going towards saving should always be more than the money towards expenses. Well, it is understand that expenses have increased in the modern world. But that does not mean that one must keep on buying things in Credit Card and end up in paying bills for the entire life. You can have mortgage, loans and many more things alongside it but that should not overburden you. Hence you must make sure that you save adequate money to remain prepared for the uncertain future.
Improve your Civil Score
You must make sure that you do not default in the Civil Score by not paying the credit card bills or defaulting in the loan. You must be score well, so if required in future you can take loan in emergency.
Use of Technology
This is last but not the least. There are many financial management software and financial management apps available in the market. You can use them in manage the financial things.
The financial risk management is all about taking the correct decisions in present to secure and prepare for the future during financial hardship or trouble.
Maintain adequate emergency funds
Keeping dual emergency funds provides a rock solid hedge against the unexpected. So keep a small rainy day fund to help weather short-term, low-impact financial storms, and a larger separate emergency savings account with three to six months of living expenses for longer-term crises such as a job loss or medical issues.
Market Risk
Market risk, or systematic risk, refers to the likelihood of financial loss due to movements in market prices, which can be a result of an economic crash or natural disaster. There are three main market risks: interest rate, foreign exchanges, and price change. While there’s little businesses can do to completely eliminate such risk, they can take preventative measures such as hedging to ensure financial stability.
Pay Cash :
Pay cash for everything except purchasing a house . Yow will save tens of thousands — if not more — by purchasing everything with cash and avoiding interest fees, finance charges, and late payment fees. All of those simply go away when you pay cash and you will never buy something you cannot afford.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin