“If you stay ready, you ain’t gotta get ready” – James Brown
Here are three steps to take now so that you don't panic should your financial picture change.
Keep six months' worth of living expenses in cash.
Should you lose your job or have some other emergency, knowing that you can pay the rent and eat for the next six months will mean you have a lot less stress. Save that money before you do anything else with your cash. Only once you have six months' worth of expenses saved should you start investing.
Know what you spend your money on.
When companies go through hard times, they know where they can cut back to avoid losses. You should do the same. Track your monthly expenses so that if you lose your income or incur a large unexpected payment, you know what levers you can pull in your own daily life to lower your costs.
Understand your assets and income.
If you have investments, knowing how much income they spin off each month or year is very important.
For example, if your investments generate $3,000 per month in income and you lose your job, knowing that you'll still have $3,000 coming in each month can make the adjustment less stressful. And if you know that you have other investments (like growth stocks) that could be turned into cash-producing assets (like dividend stocks or bonds) to generate even more income, that can go a long way toward lowering your anxiety level.
Update your numbers quarterly so you have a clear picture. It's a great feeling to see your money and income grow over the years. And since you'll have a clear picture of what you have and the income it produces, you'll be able to invest and make changes accordingly.
Health is Wealth.