Many factors lead to financial problems and bankruptcy. While there are things that are simply beyond your control (example: sickness, disability, unemployment, etc.), a lot of bankruptcies are also a result of poor financial management. A lot of people are embarrassed to admit this but it’s true.
When it comes to handling money, there are a number of pitfalls to avoid and the more you are aware of them, the better prepared you will be when you see them. Here are 2 mistakes you should avoid if you want to stay out of financial trouble:
Not having an emergency fund: It is not a matter of “if”; it’s a matter of “when” a financial emergency will arise. A lot of people are spending way beyond their means that they are unable to save even a few dollars every month for the rainy days.
Financial planners tell us that it’s a good idea to have at least 3-6 months’ worth of living expenses in case you lose your income for whatever reason. If you are living paycheck to paycheck with no savings, you are putting yourself in a very vulnerable position. What will happen to you and your family if you miss even one month’s paycheck? Will you be able to support yourself and your family temporarily and pay your bills?
The other problem with not having some kind of emergency fund is that if any unexpected expense comes up (car repairs, emergency dental procedure, etc.), it could easily turn into a “financial emergency” because it is not in your budget. So what do people usually do? Well, since they have no money allotted for the unexpected expense, they will borrow the money or charge it on a credit card. You pay enough of these “emergencies” and pretty soon you will realize that you’ve bitten off more than you can chew.
Not having a spending plan: This is usually called “budgeting” but I like the term “spending plan” better. A spending plan is exactly that- a plan on how to spend the money that you make every single month. Without a plan, you will most likely overspend and I bet it will also be on things that you probably don’t even need.
Do you know exactly where your money is going every month? Every day, I meet with people who make a lot of money and yet they are financially broke. Why? Because they are completely disconnected from their money! All they know is that they work hard, long hours and they couldn’t figure out why they are broke every payday. What’s worse is that they have nothing to show for the money that they make. This is the worst feeling one could have. There is no sense of fulfillment and it makes you feel like you are working for nothing. Does this describe someone you know- perhaps you?
If you want to stay out of financial trouble, it is time for you to take responsibility for your actions and your life. You can’t leave your financial future to chance and hope that somehow, things will be alright. Hope is not a good financial plan. You can hope but you also need to take action if you want your life to change.
If your finances are out of control and you need help in getting everything back in order, I would like to help you. For a free CONFIDENTIAL consultation, please call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos , West Covina, Valencia and Riverside.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.