We know that, when it comes to our health, it’s easier to avoid a crisis than to cure one. The same is true of our finances; it’s easier to avoid one happening than fixing it. You can fix a financial crisis if it does happen, but no matter what, you’ll be under a lot of stress during the time it takes to mend a financial mess.
There will always be things out of your control that could throw a wrench into your finances. Anyone can suddenly fall ill and not able to work, or have an accident, or even be laid off. These outside factors will always cause problems, and you have to find other sources of income and limit your spending to the basics until things get back on track.
That said, there are also several things within our control that we might do wrong to lead to a financial decline. This could be making a bad investment, spending beyond our means, or a reluctance to try and save some money, plus other things.
You can only prevent the preventable aspects of your life, and making more informative life decisions is the first step to help you avoid a financial crunch. So, what are the things you can start doing right now to better prepare your financial future?
Deal with money problems immediately: A money problem isn’t going to go away on its own, nor will it fix itself. Procrastinating on a problem will only make it worse, and that’s a certainty. Make sure you always have your bills paid on time, as well as any credit card debt. It can happen that you can fall back on paying some bills that need to be paid up as soon as possible before things spiral out of hand. In which case, and in many cases of emergency, lots of people will opt to take out a loan. Yet not every financial institution will be willing to lend you. For example, a bank can turn you down for several reasons, most often being having a low credit score. In this case, you want to look for lenders that accept a low credit score because, at that point in time, you need cash and not a judgment on your low credit score. Lenders don’t function the same way as any other channels, and you can receive the cash quickly and pay off any debts or outstanding bills you might have. As long as you’re able to pay the loan back, you should have no problem being accepted by a reputable lender.
Create a budget: You need a firm footing on your finances, and this is the obvious way to start, but it’s often missed by people. You have to know how much is going out and what it’s going out for, as compared to how much money is coming in. The smallest or the biggest financial mess starts because not enough money is being made to keep up with expenses. Writing out a budget doesn’t have to be overly complicated, and even if you don’t know how to make a weekly, monthly, and yearly budget, there are plenty of tools out there to help you.
Spend less: This is a no-brainer, but it’s often surprising how much people spend, even in the midst of a money problem. The truth is, not everything we buy has to be in the top league of its category. For example, you absolutely do not need to invest in designer clothes in all clothing items. Sure, it’s nice to pamper yourself every now and then, but more then, than now. You don’t always have to buy the latest gadgets or phones or spend vacation in expensive hotels and eat at expensive restaurants. There are always options in what we buy and spend on, so you want to see the available options that suit your budget.
Maintain your belongings: The way we treat our belongings can be very harsh sometimes! Our cars, for instance, have to be maintained instead of waiting for something big to go wrong with them. The same goes for our houses, where, with regular maintenance work carried out, your items, that you worked hard to get, can last longer. Small maintenance jobs will typically be less expensive than purchasing a whole new item or going through a big fix. That’s a small note to keep in mind the next time you abuse your car, TV screen, laptop, phone, or anything that you use. The more you use something, the more careful you can try to be when using it.
Use your skills: Whatever you do, know that any ‘get rich quick’ scam out there is just that; a scam. Don’t be fooled by investments that sound too good to be true, since they usually are. If you don’t know much about the investment or the people in a business, then don’t do anything you’ll regret. At the very least, make sure you have and understand the information about an investment. There’s no secret way of getting rich except through work. So if you have a skill, you could start making money out of that. It could be sewing, cooking, tutoring, or even running errands for people who need help. For some people, these small skills can turn a hobby into a full-blown business. For others, it’s another way to earn some extra cash on the side, so that at least they have their basics covered for every month.
There are usually quite a few red flags and warning signs that will pop up before a crisis actually hits, so pay attention. When you notice you’ve been spending too much or needing to borrow money too often, or you don’t even know how much you have, then these are all wake-up calls. It’s perfectly all right to ask for guidance from others your trust on how to manage your money. Once you get the hang of making good decisions, you’ll be avoiding what everyone wants to avoid – a financial crisis.