Risk Reduction – Part 2

The recent decision by the Office of Disaster Preparedness and Emergency Management (ODPEM) to switch emphasis from disaster preparedness to risk reduction got me thinking about how we deal with our financial situation.  It seems to me that the principle of risk reduction could be applied to our financial situation in order to reduce the hardships associated with emergencies.  Some of the measures that we could employ are as follows:

One should develop the discipline of savings that is, the habit of putting some money away to meet those unexpected emergencies that arise from time to time.  What each person can save will depend on their current salary but 5 – 10 per cent of your monthly earnings is a good guide.

1. Minimise the amount of loans that you take out as borrowing has a tendency to make us buy what we do not really need.  Borrowing too much also puts a strain on the other areas of our budget such as food, utilities and transportation. One should try to keep the loan payments to a maximum of 35 percent of your net salary.
2. Buy insurance to help with the following situations; health insurance to assist with medical bills, life insurance to aid with the cost of a funeral as well as to provide funds for the future maintenance of your spouse and children and property insurance in the event of fire, flood, hurricane or earthquake.
3. Get educated in order to ensure better job prospects and to reduce the likelihood of being made redundant.  Education is not only to be seen as getting a degree but also learning other skills that can be useful at the workplace.  For example, typing, computer software, languages, supervisory management, etc.  Broadening your horizons can also bring more opportunities your way.
4. Take your vacation each year as it is important to have a break from work to refresh oneself and to spend time with your family and friends.  This will help to keep you alert at work and will assist in maintaining a high standard of work.  Tired workers are unable to function effectively and the work suffers and they become targets for redundancies.  Similarly maintaining your physical and spiritual well being aids in the effectiveness of your work.

 No matter what one does one can not avoid the emergencies that will come in life.  They are sure to come your way and thinking that they won’t happen does not help.  Instead let us recognise that emergencies do arise and although we can’t stop them we can certainly reduce the risk of them becoming catastrophies by using these methods among others to help us to deal with the consequences. After all it is better to be safe than sorry.