Keep Your Finances In Different Places || Spreading The Risk Of Loss

in LeoFinance3 months ago

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Don't keep all your eggs in one basket. I'm pretty sure most of you have heard this saying before in some kind of context. It's based on the concept of diversifying whatever resources you're putting to work in different place, whether it be time, energy or finances. This way if one of those places fails for some reason, you don't lose all of that particular type of resource. It's an especially popular concept with people who are into investing. Stocks or cryptocurrency or something else, doesn't matter.

Spreading the risk is a good practice when you're dealing with finances. Even if it's not in different currencies or decentralized coins. What I mean is that even your local fiat currency needs to be spread out in terms of risk. Some make the mistake of keeping all their money in one place. One person might have all of it in their home somewhere. Another might have all of it at just one of the local banks.

But what happens if that specific bank declares bankruptcy. Or if that house burns down or gets flooded. Then you're out of luck and out of money. A good practice in my opinion is to keep this wealth that you're saving in different places. A few parts at different banks, a bit at home, a bit in real estate, another bit in cryptocurrency, and so on. It may take some keeping of books on your part, but your funds will definitely be safer this way in terms of being able to lose it all at once. Another problem you might avoid is being able to spend all of your money at once when it's more easily accessible from just one place. I'm looking at those of you with less self-control.

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Now if you're already doing this, it may seem like a pretty simple and easy concept to grasp and use. But I often see people make that mistake of just having all of their finances in one place. Not sure if that is a thing in my country alone, if people are not as aware, or if they are just a bit too carefree. The again, it could be that they don't have much to spread out to begin with, as living from month to month can be more common than we might think.

Whatever the reason or situation, it always makes more logical sense to spread out the risk of loss when it comes to managing your finances. And even though my examples may not work for everyone, there are definitely more alternatives out there. One just needs to be mindful and strategic.

So, how do you deal with risk when it comes to your finances?

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Most people in the western world don't need to worry about this, because they're deep in debt and have no money.
The rest of the world is broke anyway.
The 1 % are rich and they already know what to do with their funds.
Probably that's why they're rich.

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Most people in the western world don't need to worry about this, because they're deep in debt and have no money.

True, I often forget that in the western developed world people spend money they don't have and then have to pay it back later. Here in Suriname credit is not as easily handed out, definitely no credit cards (only debit), but many people are broke, meaning that they live from paycheck to paycheck and take out bank loans.

Most of the rich nowadays are rich through means of old money that keeps propagating itself throughout generations. For someone to become extremely wealthy from point zero in one lifetime is very difficult. But that doesn't mean they can't be financially well of.

!WINE

Here in Suriname credit is not as easily handed out, definitely no credit cards (only debit), but many people are broke, meaning that they live from paycheck to paycheck and take out bank loans.

Credit from banks is indeed not for the general public, but I've seen that stores (Kirpalani's, Lucky Store and even those small local stores) used to give out "credit" to customers or rather let the customers pay later for the goods. Don't know if that's the case in recent years.

Those business can take out loans because they have the assets (property, items they are selling, etc) to back up the loan. Usually that's the case.

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That's true. Those are the "huge" companies in Suriname and I suppose they know they'll eventually get paid. Because I don't know anyone who makes use of that option - or they don't talk about it - I wouldn't know if it's still available.

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I’m so spread out my wife has no clue what I have. ( not a good thing )

One thing is for sure, I hate keeping it all in one place. And even though many may say never keep your crypto on exchanges, I believe in not keeping all of it on exchanges. Cause the fact is a hardware wallet can get hacked, less likely but possible.

In some cases it's better to have crypto on the exchange, especially if it's for trades that are less long term. No point in going back and forth between wallets and exchanges and losing in withdraw/deposit/transaction fees.

I try to spread out and stretch whatever I have. Currently I have savings, crypto and insurance, stocks at hand. Still looking for alternatives as while I am still young so that I might enjoy the benefits in the future together with my family.

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while I am still young so that I might enjoy the benefits in the future together with my family

This is my goal as well. Getting rich quick is out of the question. It's all about long term goals for future financial stability and freedom. !ALIVE

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