When you’ve worked hard to accumulate money and other assets, you become extremely protective of what you have. People protect their assets in different ways, but the end goal is usually the same – to keep assets safe from the many risks that exist. Protecting your money can be as simple as educating yourself about the threats that exist and being knowledgeable about what you can do, or as complex as seeking professional advice from legal or finance professionals. The truth is that everyone is vulnerable to these risks and protecting one’s money should be a priority that requires some advanced thought and action.
TYPES OF RISKS
There are several risks which exist that can threaten assets or the value of assets. Most people’s assets consist of cash, property and investments. From a banking perspective, these assets are susceptible to financial risks which include market risk, credit risk and liquidity risk. A market risk arises if there are movements in the prices of a financial instruments like interest rates. Credit risk is the risk of a borrower defaulting on its obligations. Liquidity risk refers to the risks that arises when there are difficulties in selling or buying assets.
Fraud is another type of risk which we are faced with. There are thousands of scams which aim to get your assets from you under false pretenses. Everyone is vulnerable to fraud, which exists in various aspects of our lives. Theft comes in many forms and is not just limited to someone running up to you and stealing your purse or wallet. Theft can be as simple as someone stealing a dollar from your bank account, or even a more elaborate method such as a Ponzi scheme.
Unfortunately, fraud is always evolving and scammers always find new tactics to get at your money. Some of the more popular ways used to commit fraud and theft are identity theft, internet scams (via emails and websites that use false scenarios to solicit funds from victims), lottery scams, communications from fraudsters (telephone calls and letters), get rich quick investment seminars and through friends and family.
Damage and destruction are risks that can destroy one’s assets. These can come in the form of natural disasters such as storms, flooding and landslides; negligence by failing to maintain the asset or malicious acts which consist of damage or destruction which are done on purpose. Property, vehicles and boats are the assets which are most often affected by these events.
HOW TO PROTECT YOUR MONEY
So, what are the some of the methods that can be used to protect one’s money? The easiest thing that you can do is to simply keep track of your finances. This includes monitoring your expenses and savings by keeping an eye on your spending habits and bank accounts. A simple excel spreadsheet can be used to create a simple budget in which you can record what you’ve spent money on. You can also check your bank accounts online at any time via internet or mobile banking. This gives you the convenience to access your account so that you can check account balances or perform transactions.
Keeping your personal information and financial documents safe is another way to protect your money. Fraudsters can use your name and an identification number, bank account number or social security number to steal your identity and your money. Do not give out your personal information to anyone. Your financial institution will never ask you for your personal information over the telephone or via email, and you should never volunteer to give out this information.
Another step that you can take to protect your money is to make copies of your financial documents and keep them in a safe place. Where possible, keep cheque books, bank account documents, passports, credit cards and debit cards in a safe place. Older adults should confide in a trusted family member who has their best interests at heart, about where these items are kept, in case of an emergency.
Insurance is a popular tool that can be used to protect assets in the event of a catastrophe. There are different types of insurance policies, but the more popular types which are designed for assets are home insurance, car insurance and home contents insurance. The policies are designed to reimburse you for the assets which have been destroyed. Although there is a cost attached to insurance, knowing that you are protected can be comforting.
Before you make any big financial decisions, make sure that you read and understand the contracts before signing and ask questions. Even though it might seem unimportant, too long to read or the initial terms might seem inviting, that contract will define the relationship that you have with the product or service provider. Ask questions if you are not sure about something or if you need more information.
We all have to be responsible for the decisions that we make when it comes to protecting our money. Sometimes being vigilant and making smart decisions are the only types of protection needed. If you are faced with a situation and your gut tells you that it’s not right, chances are it might not be. If you need help or advice, consult with a trusted family member, friend or professional advisor. If you, or someone you know is a victim of fraud, theft or any financial crime, please contact the Royal Barbados Police Force or Crime Stoppers Barbados.
Bio: Dannielle Brathwaite is a banking and project management professional, who possesses a Diploma in Accounting and Business, a Bachelor of Science degree in Economics and Management and a Master of Business Administration. In her spare time, Dannielle contributes to the Odd Cents and Endless Caribbean blogs, creates surface designs and illustrations and researches project management and international business issues in the Caribbean.