13.10.2022
The Cyprus Securities and Exchange Commission (CySEC) on Wednesday released an investor guidance on financial strength that outlines how investors can adapt to a sudden change in their income, whether it be the result of unexpected expenses, sudden job loss or uncertainty . were going through difficult times for the economy.
“Achieving financial sustainability is the best way to balance financial hardship and reduce vulnerability, especially when things take an unexpected turn,” the commission said.
“Some financially stressful events, such as unemployment, divorce, disability, and health problems, affect individuals individually, while others, such as recessions, stock market crashes, and terrorist attacks, affect society as a whole and tend to , they are harder to anticipate or plan,” he added, noting that when households are not financially resilient enough to withstand financial hardship and emergencies, they “may end up with bad credit and unsustainable debt.”
The Commission stressed the importance of having a financial plan, including having a set goal to aim for, allowing you to focus on what matters as well as knowing where your money is going.
“An annual financial plan can help you make better use of your money by ensuring that you live comfortably and within your means, able to handle any sudden expenses, and you are generally on the right path to achieve your long-term financial results . goals , including ensuring a decent income in retirement,” the commission said in a statement.
“In order to make informed decisions about how you are going to make ends meet, you have to start by determining how much you earn and analyzing how you spend your money,” he added in regards to understanding how your income is distributed. , explaining that monitoring your income and expenses can help correct imbalances in your spending habits. In addition, the commission advised investors to distinguish between their needs and desires, assessing which of their purchases are really necessary, and determining what expenses can be avoided in the future.
“Once you differentiate between your basic expenses and the expenses you incur for the things you want; then cut what you can from non-essential expenses and explore ways to reduce spending on main expenses,” CySEC said. “A budget will help you have enough money for what you really need,” he added, explaining that “it can help you avoid or minimize debt, increasing your chances of surviving during a financial crisis.”
Moreover, the commission advised investors to reduce and eventually eliminate their personal debt, as well as focus on improving their financial knowledge, thereby increasing their ability to make sound financial decisions.
“According to recent polls, those who were not taught in school about finance, investment, savings, taxes and other basic economic terms – and this is the majority of us – are more likely to become adults who can often find themselves in financial poverty, “says in commission message.
“The best way to avoid this is to acquire solid financial knowledge. It’s never too late to learn and the results will be beneficial to your financial well-being. In addition, CySEC urged investors to build an adequate reserve fund, get insurance coverage, protect themselves from fraud, make plans for retirement, and also try to find ways to increase their money.
“The best way to invest depends on your current and future financial circumstances. It is important to have a good and detailed understanding of your income and expenses, your assets and liabilities, as well as your responsibilities and goals when building a solid investment plan,” he added, noting that investments begin with determining your financial goals, investment timing . and a sense of risk.
Finally, the commission stated that financial sustainability depends to a large extent on one’s own financial behavior, which needs to be developed on an ongoing basis, while emphasizing the importance of being proactive.
“The sooner you adopt sound financial behavior, or the earlier in life, the more likely you are to survive financial setbacks,” CySEC concluded.
