4 Steps for Creating a Personal Financial Safety Net
In today’s economy, staying on top of personal finances is more important than ever. However, with unemployment still higher than average and the high cost of living, it can be difficult to make ends meet. Whether you’re living alone, with a partner, or have a family, you can take control of your finances and avoid serious financial crisis. Follow these four steps when creating a personal financial safety net for yourself and your family.
1) Save Money: No Excuses
The average American is two paychecks away from going from an employed middle-class American to facing issues such as bankruptcy or foreclosure. In less than a month, an accident, illness, or job loss can turn your world upside down. It’s important to remember that you’re certainly not alone. Most Americans lack an emergency savings fund for when things go wrong.
But no matter how much you make, every dollar that can go into an emergency fund is going to help you. Maybe this means clipping coupons, taking your lunch to work more frequently, or putting loose change in a jar instead of into the soda machine. Working to become more frugal means your money goes further. Just be certain that saved money goes into your emergency fund and not elsewhere.
2) Open a Low-interest Credit Card
If you have good or decent credit, you can open a low-interest credit card with a decent limit in case emergency strikes. If you have poor credit, you may need to invest in a secured card, which is only to be used for emergencies. The secret to building good credit is to have an open line of credit that you pay off every month. The bonus is that you’ll be granted higher credit limits for responsible usage, which gives you a cushion if and when you need it.
3) Budget, Budget, Budget
Clearly budget your income and expenses. There are great online tools or spreadsheets that can help. Consider Mint.com. It’s a great way to keep track of all your bank accounts in one place. You can track your income, expenses, loans, and debts. It’s a great way to stay organized and stay on top of your bills. It can also help you track to see if you’ve been saving or spending more money this month compared to other months. If you want to do less work, consider using this site to manage your budget.
When all else fails, taking out a cash advance, like cash advance El Paso TX, can keep your family afloat for a short period of time. It’s important to remember that these loans are not long-term solutions, but meant to help you and your loved ones cope with emergencies.
4) Pay Bills on Time
It may seem tempting to postpone paying your utilities until the next month or put off paying the outstanding balance on your credit card. However, all those $5 and $10 fees will eventually add up, and over the course of a year, you’re spending hundreds on late fees and penalties. Stick to your budget, and pay bills by the due date.
This article was written by Dixie Somers on behalf of Power Finance.
Image Credit: Shutterstock.com
Category: Money Basics
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