People of all walks of life find themselves in financial difficulty. No matter what you do for a living we all need a backup plan. That backup plan should include a back up career path and enough money to cover us through an emergency or change in circumstance. In our ever-changing world, you never know when your life will be turned upside down. Whether that is a change in your marital status, a change in your health, a change in a family member’s health, or a change in jobs – life happens in unexpected ways. Emergencies happen. Your car may need an unexpected $500 repair; you may unexpectedly owe the IRS; you or your spouse may find yourself unemployed; or you may be going through a divorce. Whatever the emergency, if you plan for an inevitable crisis, it will be far less stressful and more manageable.

Try these 5 things:

  1. Live within your means. Understand what your net or after tax income is and do not spend more than you make. It can be difficult, but the stress that often comes with the debt that we incur is not worth the object or experience.  
  2. Pay yourself first by saving money. Savings in the bank provides peace of mind that you will be able to manage through a crisis. When savings goals are met, you have the financial freedom to spend a little more and still feel financially confident.
  3. Use debt sparingly. It is easy to take out a credit card to pay for things. It is not so easy to pay the bill when it comes due. If you are thinking that you can manage all the payments based on your take home pay, what happens when something unexpected happens?
  4. Understand your fixed and discretionary spending. Fixed costs are things like rent/mortgage, utilities, car payment/expenses, insurance, groceries, and child-care. Discretionary costs include things like dining out, entertainment, vacations, shopping sprees, and buying beyond our means (i.e. buying a Lexus when you can only afford a Toyota).
  5. Determine what your budget is and then track your actual spending to your budget. It may surprise you!

Savings provide financial freedom. Financial freedom provides peace of mind and choices. Start small, set goals, and enjoy your successes along the way.