Five Steps To Avoiding Financial Ruin

Effectively saving your money can enable you to become financially independent, save for retirement and prepare for unforeseen expenses. Not saving or planning for the future could instead keep you from having economic security.

1. Budget

Create a budget and stick to it! If you have debt, this can be a step to paying it off and securing your future. Create a summary of your income and expenses for a given period, and prioritize your spending. This is helpful in identifying wasteful and unnecessary spending habits.

2. Don’t Use Your Credit Cards For Everything

If you don’t have the money to immediately pay off your charge, then avoid using your credit card. Don’t make charges based on future income. The future is often unpredictable, and future income doesn’t always materialize.

3. Save Your Surprise Income And Earnings

Just because you didn’t plan on having unforeseen income and earnings while creating your budget, that doesn’t mean you should spend it right away. Surprise expenses are just as unpredictable as surprise earnings. Consider saving that income for emergencies, as peace of mind is important.

4. Plan For Retirement

It’s never too early to start saving for your retirement. The sooner you begin saving, the more time your money will have to grow. This is because of compound interest. Putting $5,000 a year away from the age of 25 to 35 will result in greater savings than putting $5,000 a year away from the age of 35 to 65. How does that make sense? Watch the video below! 



5. Don’t Impulse Buy

Make sure that you think things over before making a purchase. If you see something that you really want, consider holding off for a week or two. Often, you’ll find that your urge to buy it will disappear. However, if you still want it after that period of time, then make the purchase if it falls within your budget. Also, don’t buy something just because it’s on sale. Buying a $300 item on sale for $200 didn’t save you $100 if you didn’t really need the item anyway. It just cost you an unnecessary $200. Don’t be fooled by the sales!

 

What tips do you have to avoiding financial ruin? Let me know!

Take care,

Jake