Survive With Your Finances
Recent economic conditionshave demonstrated how easy it is for us to get caught out
with our finances, and demonstrated how important it is to maintain tight control of our spending.
In good times we convince ourselves that we can extend our borrowings and spending with little thought as to the possibility, some may say inevitability, of either a change in personal circumstances, or the economy in general. However, there are steps one can take to minimise the financial fallout when times change and things become tougher.
It's easy to get carried away when times are good, but the problem is that we don't consider the possibility that our finacial situation may change for the worse. Peer pressure does not help, many of us like to give the impression to our friends that we are well off; a facade that is difficult to maintain when the icy wind of change starts to blow.
We often take debt on for the instant gratification of how we think we will feel when ever we possess such an article. However, the excitement is often in the anticipation of the purchase and after we have bought whatever it was we wanted we almost instantly take it for granted, and the feelings of excitement are replaced by the worry of keeping up the payments! Would it not have been better to not have bought it in the first place and retain the security of the cash?
Banks have taken a very tough line on lending these days, so there's no guarantee that they will be of much help should you find yourself in a financial crisis such as losing your job. One measure you can instigate to act as security against the consequences of this happening is to have the equivalent of 6 months salary saved, as this is a figure that it thought to be sufficient to see you through, and even if it's not, the bank will be more prepared to lend money if you have some saved should you need it.
The problem with saving money is the same as buying life insurance. Both are necessary, but both are in some ways, intangible. When we make a purchase, we have something to show for it, a new motorcycle for example. In a sense, we can be averse to saving money as we don't seem to "have" anything for it. Indeed, as our savings grow, so does the desire to blow all the accrued cash on a big luxury item, rather than keep the money saved.
Starting a budgeted saving plan can therefore seem like deprivation. That is one of the main barriers to budgeting and saving, we see it as a restriction. If we could just shift our perception a little bit, we could see it as a "freedom plan". Doesn't that sound much better? Focus on the fact that what you are doing is building your financial security and it becomes easier to turn the restriction of saving into the warm feeling of shelter. Think of it as building a solid and welcoming tower (it could be a thatched cottage - anything that inspires you), that will protect and shield you when times get tough.
As you work on changing your ideas on saving, you will begin not only to see the benefits and actually do it, you will start to get the same satisfaction from saving as you do with spending.
by: Bob Tremerituus
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