No one sets out to end up in debt or bankruptcy, but it can happen to the best of us. Financial hardships are often the result of unplanned circumstances like job loss or medical illness. Even if financial trouble strikes unexpectedly, there are a few things we all should be doing to help combat the potential for backlash from the unforeseen.
Tips For Financial Stability
Money management takes practice. It isn’t a skill that comes automatically, or even easily for some people. One of the biggest areas lacking in people’s financial repertoire is budgeting. More than 60 percent of Americans admit to not having a budget. Tracking your spending and outlining how your money is to be spent each month is crucial for staying out of financial trouble. Even if you aren’t in trouble with your debts, making it a habit to keep track of your spending and payments can eliminate wasteful purchases.
Not only are most people not keeping an eye on their money each month, but many don’t prioritize saving either. A savings account can be the difference between stability and delinquency when tough times strike. The general rule is to have saved enough money to cover at least three to six months worth of essential expenses, such as a mortgage, car, food and debt payments. Without an emergency fund to back you up, a small financial hardship can quickly snowball into missed payments, delinquency and credit collections.
A smart money manager also knows when to seek help, most often before credit damage and creditors are involved. The best time to seek help is before trouble strikes. Credit counseling agencies are always available to help teach you new financial skills and help you develop a financial plan that works for you. If your debts spiral out of control quickly, a bankruptcy attorney or other financial professional can help review your situation to determine the best course of action.