Becoming financially secure is a noble goal and one that many people share. People who have even a small cash reserve are better able to deal with the various emergencies and problems that life throws at them. If you are concerned about your financial stability and want to learn how to develop reserves to protect your family during times of crisis, keep reading for four painless ways you can start now to become more financially secure.
One: Have a Written Plan
Spending money without a plan is a sure-fire way to see it disappear, dollar by dollar. Even though having a budget may seem constrictive to some, it can actually be a great way to develop control over spending and help make each dollar work to your best advantage.
One of the best types of budgets to have is a zero-based budget. This spending plan is simply a way to account for every dollar that flows into your household each month. It serves as a guide, and makes it easy to direct funds to where they need to be so that bills are paid on time and nothing is forgotten. You can find more information on setting up a zero-based budget here.
Two: Micromanage Daily Spending
Challenge each family member to micromanage their daily spending for a month, or even better, for a year. Ask for a receipt for every purchase made each day, no matter how small or large, and then list and compare the totals each week. This can be one of the best ways to become truly aware of each expenditure and how quickly small purchases add up into much larger numbers.
For example, consider the cost of purchasing a $2 coffee and a $1.59 muffin each morning on the way to work. This tiny purchase can seem much too small to make a difference in your financial picture. However, spending that amount just three times each week adds up to $560.04 over the course of a year, which is a sizeable amount that could have been better spent on rent, groceries, or savings.
Three: Choose Cash
Credit and debit cards are very convenient, but they can also cause people to spend more money than they planned to spend. If someone enters the grocery store with ten dollars in cash to spend, they will spend no more than that amount. If, however, someone enters a grocery store planning to only spend ten dollars on their credit or debit card, but spots something that looks delicious or finds an item they have been searching for, the bill can end up being several times the amount they intended to spend.
Four: Save For Large Future Purchases Before They Are Needed
Part of life is dealing with appliances that break, cars that need replaced and kids that outgrow their clothing. Instead of waiting until the day those purchases must be made and having to charge them or use money allocated for something else, begin a fund for each type of spending you anticipate and add to these funds each payday as part of your budget plan.
Sometimes, even while working very hard to achieve financial security, an emergency or unexpected loss of income will put families over the edge. While filing bankruptcy is not a financial solution to be taken lightly, it can sometimes be the only viable way to deal with debt that cannot be overcome in some other manner.
If you find yourself in a financial crisis that you cannot solve, speaking to a bankruptcy attorney can be a good way to determine whether filing personal bankruptcy is a course of action that you should consider.