In this tough and uncertain economic climate the average person’s job security is worryingly unstable. Combine this with an ever increasing cost of living that doesn’t truly reflect inflation rates and most of us are having more than one sleepless night worrying about the state of our personal financial affairs. However there are many steps that we can all take to ensure that we remain in personal control over our own finances. This article explores some of the best techniques to accomplish this:
Erase all your existing debt at once if at all possible.
Of course this is not always a possibility. However if you are one of the many people who happily live through their credit card overdraft you should balance that account immediately. Indeed it would be wise to deposit extra funds into any credit card account so you can still make emergency purchases with the card without putting the account into overdraft. This is important because it removes the risk of forgetting or not being able to pay off your outstanding balance at the end of each month, so should you lose your source of income you do not have to be concerned with the late payment penalty fees and the interest on your debt that will continue to gain momentum the longer it is unchecked.
Understand if your money is free to access.
It’s possible that you have a substantial amount of savings to your name which can make you feel well prepared for any sudden emergencies which suddenly require a large cash sum. Just be sure your money is in a tangible form that you can rely upon having access to in a short amount of time. This means take care if your finances are tied up in long term investments or high interest savings accounts as these accounts typically come with a condition that you do not withdraw money from your account for X amount of time, which can be up to a couple of years in some cases. If you are in dire need of your money you will be hit with a substantial penalty fee for an early withdrawal so be on your guard!
Budget correctly and seek to have a savings reserve equal to the value of at least 3 months ‘cost of living’.
A sensible budget will keep you in good standing financially and if properly outlined should have the objective of creating a separate savings account that you can use for emergencies. This can be easily set up by taking an automatic garnish off your wage and transferring it to the separate account. After some time you will not even notice the money coming out of your account and you will soon develop the 3 month reserve to pay for your rent, food, amenities etc. should you ever lose your job. This clever budgeting means you’ve provided yourself with a 3 month window to find a new job, without having to rely upon short term loans to make ends meet in the mean time.
About The Author
This article was provided by Todd McCullough, an independent business finance researcher. He writes both personal and business finance themed articles for financing and loan companies such as https://wongabusiness.com.