If you’ve had enough birthdays, you’ve seen the economy go through some good and bad times. The economy could be doing well for years and then all of a sudden, things take a turn for the worst. People lose their jobs, pay gets cut, and prices skyrocket. Coming out of the Covid-19 pandemic, we are in times just like that. To weather storms like these, you need to have your finances prepared. Here are three tips to place yourself on a sound financial foundation:
Make a Budget
Before you can really get a hold of your finances, you have to know where your money is going. Once you know where your money is going, you can then begin to create strategies to meet your financial goals. It’s easy to spend on impulse. Once you see where all your money is going, you’ll likely be surprised and find potential for some serious improvement. You can find a tool here for tracking your spend. Make a point to sit down periodically and track your spending. Different strategies work for different people. You may want to start out by checking every week and then go to bi-weekly. Either way make sure you have a grasp of your spending.
Get Rid of Consumer Debt
Debt robs you of your cash flow. The more you have going out in payments, the less money you can put to work to save and invest for you and your family. First, make sure you have a couple of thousand dollars in your pocket for cushion against an unexpected expense. Then, go to town on your consumer(non-mortgage) debts. Fall back on eating out and vacations. Getting rid of these debts will open up your ability to…..
Build a Full Emergency Fund
The emergency fund is the most essential tool in your financial arsenal. In life, expected things will happen. You go out to your car in the morning and find a flat tire or your fuel pump goes out all of a sudden. These among other things will catch you by surprise and could cost you some serious coins.
Oftentimes, people make the mistake of thinking they are doing okay with money because they are able to make all their payments. Remember that times will not always be prosperous. The economy will crash and cause things like job losses and pay cuts. Can you do without a job for a few months while you look for another? If not, make it a point to get 3 to 6 months of expenses saved up. Do this before upgrading your car or buying luxuries. This is critical to protect you from hard times that are certain to come.
Accomplishing these three tasks will bring you much financial peace. When times take a turn to the negative, you will be able to stand tall through most any situation. If you need assistance on how to execute on these tips, do not hesitate to contact us.