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Manage Risk of Expenses:

Risk Avoidance: This entails attempting to avoid high-risk activities. Risk avoidance can lower the financial cost of risk.
- Tracking Your Spending: To avoid this budgeting mistake, start small. Set a reasonable goal to track your expenses for one month. You might even consider using budgeting apps to make tracking expenses easier each month. The easier you make it to track your expenses, the easier it will be to build good budgeting habits.
-Updating Your Budget:To avoid budgeting risk, set calendar reminders to review your budget. Make your review schedule one that helps you feel confident about the numbers in your budget and always have enough money for expenditure. It’s also wise to review your budget at any time when you experience life changes. Whether you find that you can spend more or need to spend less, there’s always a budget tweak to keep your personal finances on track, avoid future expense risk
-Fun balance: To avoid this, add some real fun to your budget that suitable with your budget. If you’re afraid of having too much fun, start small and ease into a monthly figure that gives you a balance between financial responsibility and a well-lived life.

Risk transfer:the potential loss from an adverse outcome faced by an individual or entity is shifted to a third party.
For example, an individual who purchases car insurance is acquiring financial protection against physical damage or bodily harm that can result from traffic incidents.

There are two common methods of transferring risk:

- Insurance policy: Insurance companies typically charge a fee – an insurance premium – for accepting such risks.

- Indemnification clause in contracts: Contracts can include an indemnification clause – a clause that ensures potential losses will be compensated by the opposing party. For example, consider a client that signs a contract with an indemnification clause. The indemnification clause states that the contract writer will indemnify the client against copyright claims.

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Avoiding investment risk

Fixed income: If you are worried about losses in the stock market, you could manage the level of long-term investment risk by managing the proportions of diversifying asset classes like stocks and bonds. You could also consider high quality fixed income products, like Treasury bonds or investment-grade corporate bonds, that provide a fixed rate of return (assuming the issuer doesn't default). Keep in mind, investing in bonds involves risk, including interest rate risk, inflation risk, credit and default risk, call risk, and liquidity risk.

Asset allocation: Stocks historically have offered more return but also more risk than bonds. An important way to manage investment risk is to set a mix of stocks, bonds, and short-term investments that is aligned to your investment time frame, financial needs, and comfort with volatility.1

Asset location: You may be able to reduce federal income taxes by holding highly taxed investments like bonds, stocks held for a year or less, and real estate investment trust fund while leaving investments taxed at relatively low capital gains rates in taxable brokerage accounts. Saving on taxes can help your money grow faster.

Tax-smart withdrawals in retirement: Knowing what money to withdraw from what account can help you reduce tax liability, and make your savings last longer. If you are already retired, consider withdrawing first from your taxable accounts, thereby maximizing the ability of remaining investments Transferring investment risk

Transfer investment risk

Pensions: If you have a pension, your employer doesn't pay your monthly pension check after you retire; they transfer the risk to an insurance company that then becomes responsible for paying your monthly pension.

Income annuities: If you are concerned about running out of money in your retirement, consider an immediate or deferred income annuity with a lifetime payout option.³ These annuity contracts are designed to deliver a guaranteed stream of lifetime income⁴ beginning immediately or deferred until a date you select in advance, such as age 70 or even age 85.

Variable annuity with GMAB ⁵ (guaranteed minimum accumulation benefit): This annuity, which offers the opportunity to stay invested in the market and transfer risk to an insurer, provides a guaranteed return of your initial investment at the end of the holding period, typically 10 years, regardless of market performance (less the impact of any withdrawals or resetting of the benefit). Be sure to consider fees and work with a financially strong insurance provider. Generally, Fidelity does not recommend annuitizing more than 50% of total retirement assets.

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*Risk transfer:
1.Definition:
Risk transfer refers to a risk management technique in which risk is transferred to a third party. In other words, risk transfer involves one party assuming the liabilities of another party. Purchasing insurance is a common example of transferring risk from an individual or entity to an insurance company.
2.Example: Purchasing insurance
3.Method of risk transfer:
3.1. Insurance policy:
Purchasing insurance, as previously said, is a popular technique of risk transfer. When a person or a corporation buys insurance, they are transferring financial risks to the insurance firm. For taking on such risks, insurance firms often charge a fee - an insurance premium.
3.2.Indemnification clause in contracts:
Contracts can also be used to assist a person or organization in transferring risk. Contracts can include an indemnity clause, which assures that the opposite party will cover any possible damages. In its most basic form, an indemnity clause is a clause in which the contracting parties agree to compensate each other for any injury, responsibility, or loss incurred as a result of the contract.
4.How does it work:
Risk transfer is a common risk management technique where the potential loss from an adverse outcome faced by an individual or entity is shifted to a third party. To compensate the third party for bearing the risk, the individual or entity will generally provide the third party with periodic payments.

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Avoid risk Income
- has a sufficient cost for operations
-increase efficiently at work
- make a monthly budget
- record all income expenses
- pay installments on time
- reduce consumer spending
- allocated emergency funds
- have health insurance
- if you want to avoid the risk associated with the ownership of property, don't purchase property but lease or rent instead .

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1. Methods to manage the income risk : death, age, unemployment
-Avoid the risk:
Make a clear financial goal
Diversify the portfolio in investment  decision
Vary the sources of income as well as enhance various skills and knowledge
Take care of your own health and safety issues to avoid disability or accidents
-Transfer of risk:
Risk transfer refers to a risk management technique in which risk is transferred to a third party. In other words, risk transfer involves one party assuming the liabilities of another party. Purchasing insurance is a common example of transferring risk from an individual or entity to an insurance company.
+The most common example of risk transfer is insurance. For example, unemployment insurance, pension insurance,

2. Method to manage the Expense Risk
-Avoid the risk?
Make the financial goals and purchasement plan
Spending plan helps to balance finances and have an effective spending control plan.
Recording your daily expenses will help you control the amount of money you spend
Although we do have some control over our expenses, they can quickly rise without us even realizing it. Changes in your lifestyle, family composition, life events can quickly change your budgets, not to mention any unfortunate events leading to regular medical / treatment expenses.
-Transfer of risk?
There are two common methods of transferring risk:
1. Insurance policy
Purchasing insurance is a common method of transferring risk. When an individual or entity is purchasing insurance, they are shifting financial risks to the insurance company. Insurance companies typically charge a fee – an insurance premium – for accepting such risks.
For example, purchasing a home is the most significant expense most individuals make. To protect their investment, most homeowners buy homeowners insurance. With homeowners insurance, some of the risks associated with homeownership are transferred from the homeowner to the insurer.
2. Indemnification clause in contracts
Contracts can also be used to help an individual or entity transfer risk. Contracts can include an indemnification clause – a clause that ensures potential losses will be compensated by the opposing party. In simplest terms, an indemnification clause

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Avoid the risk

Assess your financial situation: Determine your living expenses, periodic expenses and monthly debt payments you owe.  Compare your expenses to your monthly net income. Be aware of your total debt.

Develop a realistic plan. Create a worksheet to document your monthly expenses. Record where and what you are spending money on.

Determine the difference between needs and wants. Create a sound budget by taking care of your needs first (food, housing, clothing, transportation). Money should be spent on wants only after needs have been met.

Don’t allow expenses to exceed your income. Make adjustments in your budget when you are close to over spending.

Pay bills on time. Maintaining a good credit rating and avoid late charges.

Use credit wisely. Determine what you can comfortably afford to purchase on credit by reviewing your budget. Don’t allow your credit payment to exceed 20% of your monthly paycheck. Avoid borrowing from one creditor to pay off another. Make a conscious effort to use paper (actual dollars available) not plastic (credit cards).

Transfer risk
Insurance policy
When an individual or entity is purchasing insurance, they are shifting financial risks to the insurance company.

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Reducing risk in income

Avoid the risk

- Have a second source of income

The best way to protect yourself from an unexpected job loss is to find an alternate source of income. Perhaps you can start up a side business doing something you enjoy in your free time. And if you’re really lucky, you may be able to find a way to earn additional money without even having to leave your home.

- Have an exit strategy for every investment you make

You can’t guarantee an investment will be bought at the optimal price, but, if you’re smart, you can always control how much you ultimately lose. The best way to do that is by taking emotion out of the equation. So have an exit strategy in place whenever you take a position on a stock, bond or any other investment. The best way to do that is by establishing predefined selling points — for both a profit and a loss.

- Check the financial ratings of institutions you work with.

After witnessing the downfall of many financial companies in 2008, I've realized how important it is to review the financial ratings of our banks and institutions. I keep regular tabs on my mutual funds and online bank accounts, along with the companies that house them

- Minimizing Income Risk

Diversifying assets so that long-term investments with fixed rates of interest are balanced with short-term income fund holdings is one strategy for reducing the degree of income risk associated with a portfolio. This results in a situation in which the fixed rates on long-term investments offset any income decreases that may occur when interest rates fall. This contributes to the establishment of a more consistent floor for income payouts, allowing beneficiaries to plan their budgets around that minimum.

Transfer of risk

- Insurance policy

Purchasing insurance is a common method of transferring risk. When an individual or entity is purchasing insurance, they are shifting financial risks to the insurance company. Insurance companies typically charge a fee – an insurance premium – for accepting such risks.

- Indemnification clause in contracts

Contracts can also be used to help an individual or entity transfer risk. Contracts can include an indemnification clause – a clause that ensures potential losses will be compensated by the opposing party. In simplest terms, an indemnification clause is a clause in which the parties involved in the contract commit to compensating each other for any harm, liability, or loss arising out of the contract.