Although not the most common reason, some people do end up in bankruptcy due to improper money management. Of course, no one intends to file for bankruptcy when they start out their financial lives. And, very few people are taking advantage of the bankruptcy system by filing. The courts do a good job of filtering out fraudulent cases so that only those who truly need bankruptcy are granted its provisions. However, a few good money management skills can help you avoid getting into bankruptcy or bounce back quickly after your debts are discharged.
Essential Money Management Tips:
One of the biggest culprits behind bankruptcy is the credit card. Please, avoid using a credit card when at all possible. If you’re in a particularly delicate financial situation, a credit card isn’t going to do you any favors. Having a credit card for the purpose of establishing credit isn’t a bad thing. In fact, it’s usually a good idea. But, if you can’t practice good money management skills with your card, then avoid it altogether!
Medical debt is another big reason that most people find themselves in bankruptcy. If your employer offers a health insurance plan, take advantage of it! Health insurance is expensive. If you can get it at a heavily discounted rate, then it’s worth every penny. Set aside enough money to cover your yearly deductible, and then you should be financially prepared for the worst life can throw at you!
Determine a family budget, and have everyone agree to commit to it. Simply knowing exactly where your money is going can help you make smart decisions in your financial life!
Follow these tips and you’ll greatly reduce your risk for filing for bankruptcy. And, if you already have filed, or you’ve recently come out of bankruptcy, putting these money management tips to use can help you get on the right financial path!