For an increasing number of people, bankruptcy is becoming more real than ever before. With unemployment up, the housing market suffering, and the stock market faltering for the last decade, bankruptcy has popped up on the radar of upper-middle class families, many of whom thought they would never have to even consider such dire financial moves. How can you protect yourself and your family from ever having to consider bankruptcy? We have a few tips for you.
Money Management Skills
First, create a strict, well-defined budget the whole family understands and agrees on. Now, stick to it! Many families will create budgets but use them more as guidelines. While desperate situations may appear, you should be staying within your budget more than 95% of the time. Before you turn your attention to investments or any kind of bonds that will lock up your cash, make sure you have cash available to your family for three to six months of expenses in the event of unexpected unemployment. This cash should be immediately accessible and should have no other purpose than providing a safety net. It is also important to always have a backup plan for what you will do if you can’t pay your mortgage or if you lose your job. Being caught off guard and not having a plan in these crises means wasted time, which will be a greater expense for you. Knowing what you will do in an emergency can save you money in the long run.
With smart money management skills and the proper allocation of your family’s finances you can prepare yourself to avoid bankruptcy when both small and major bumps in the road come your way.