Due to COVID-19, global economic conditions are very poor and almost every country has faced an economic slowdown, including the United States, the United Kingdom and India. Though the recovery has started, it is quite slow and will take years to recover. So, in these troublesome times, one of the key questions that every business owner is asking — “how to protect our business income?”
Though it was not possible to predict such a crisis, it is at least possible to plan and prepare for it. This is why it is imperative to opt for a good income protection plan or insurance. There are numerous income protection policies and plans available all over the world which in the first place should be your choice against the slowdown. These plans help you protect your income from business or jobs from any financial disaster.
Though it is difficult to protect income in such a failing economy, there are certain ways by which you can protect your income. These ways lead to a step-by-step approach to protect your earnings in an efficient manner, thus it is a part of your financial planning. Here are some ways by which you can protect your income:
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Retain a Specific Proportion of Your Income as a Cash Reserve
Retain a specific proportion of your income as a cash reserve for contingencies which would provide you support in tough times. The cash reserves should be enough to support you for at least 6 months ahead.
Set Some Profits Aside for the Future
At least 10-12% of the profit should be put aside for the future. If you analyze that, you can put aside 10% of it, and make sure you save more than 12%. Saving more than you feel comfortable with ultimately helps in increasing your savings.
Manage Your Investments
Basically if you are borrowing funds, invest them for a good cause rather than utilizing them for establishing new offices. The investment would surely increase your money value and in future, regardless of financial crisis, there would be enough to pay back the loans as well as build new office.
Opt for Income Protection Insurance
Opting for income protection insurance is advised as it protects your income though you are stuck in any dilemma. There are a variety of income protection insurances available with different terms and conditions. You can go for any one which is best suitable for you and protect your income.
One different way of protecting your income and securing your future from the financial crisis is setting up some extra ways (passive income) to earn cash. Having extra money coming from elsewhere apart from your current business or job is always beneficial as, though you suffer from a job loss or other dilemma, there would be some source of income to earn your living.
Opt for Accidental Policies
Apart from income protection policies and insurance, there are several other options like critical illness, accident, sickness and unemployment policy, etc. available which would be of great help to secure your income even though you are ill or have met with an accident.
These ways will surely help you effectively work on the issue of protecting your income and ultimately safeguarding your future.