Becoming and remaining financially stable requires dedication and definitely discipline. You need good financial habits. No one wants to be in a spot where they are financially unstable. It is always better to have a nest egg or emergency fund put to the side for those “uh-oh” unexpected moments. It is also nice to have money put to the side for a day of fun because we deserve those sometimes too. I am going to give you ten easy steps to becoming and maintaining your financial stability. I’m not sure about you, but after this pandemic, I would love to have some money put away for a much-needed vacation.
1. Ixnay the Impulsive Spending
You just got off work and you're tired so on your way home you drive past the McDonald’s and think that would be easier than cooking when I get home. Or maybe on your lunch at work today you were looking up clothes online and saw this awesome outfit you just have to buy. These are examples of impulsive spending. Either we buy something we don’t need because we’re too lazy to utilize what we have or we see something calling our name that we don't need, but feel like we just need to buy. These expenses add up over time and ultimately all these little purchases dwindle our money over a short and long period of time.
2. Save Money
For most people, it’s hard to save money. We have our children, bills and unexpected expenses that arise which sometimes make it nearly impossible to put anything away, but we have to learn to do it anyway. My rule of thumb is 10% of whatever I bring in goes to my savings, but sometimes I just can’t afford that. When this happens, try and put at least $20-$25 away and build on top of that. It may not seem like much in the beginning, but over time this money will accumulate. Maybe you could just save your loose change in a jar, or maybe just $5 or $10, but something is always better than nothing.
3. Track What You’re Spending
Go over your last six months to a year worth of spending and see where all your money is going. Analyze how much you’re spending on fast food, shopping sprees, bills, the children and etc. You need a clear breakdown of where your money is going. Once you can easily see what expenses you have you can then reanalyze how they can better be spent or saved in the long run. I recommend once a year going over your budget and analyzing how best to allocate your income.
4. Invest
Even if retirement is far away it is never too early to invest in a 401K or IRA. You can also invest in stocks and bonds, but make sure you educate yourself on that before taking that risk. Potentially you can also invest in an up and coming business, but whatever decision you choose, be sure to check the risk vs. the reward and any and all fine print along with interest rates, charges, and fees.
5. Prevent & Eliminate Debt
If you have current debt, call the company and start a payment plan. Even if you can only pay a small amount, start getting that balance down. Ask the company if they are willing to settle on a lump sum less than the amount owed, sometimes they are willing to do that. In the process of taking care of the old debt, prevent yourself from accumulating new debt. The goal is ultimately to be debt-free.
6. Budget
Remember in step 3 we said to track your spending, now I can explain why. Once you track what you're spending you can eliminate what is not important and prioritize what is important. Separating the two will help set your budget. Your budget is what you bring home minus any bills or necessary expenses. The remainder of that is what you will need to budget for additional expenses, daily expenses, or anything else that may arise. This also includes whatever you allot to your savings.
7. On-Time Payments
Do not procrastinate with making payments. Make all payments on time and be sure to always pay at least the minimum. Ultimately you want to pay more than the minimum to decrease the interest and get the bill paid off faster, but that is not always an option. If you can make payments early do that as well. When it comes time for your bill carrier to report to the credit bureau you want your payments to show that they were paid in a timely manner.
8. Stay Dedicated
Budgeting and maintaining financial stability is hard, but stay dedicated. Do not give up on yourself when something unexpected arises. Remember to push forward. If something unexpected happens, go over your budget and spending and calculate the option that is going to be best for you. Do not allow yourself to get frustrated or lose sight of your goals. The best advice I can give is that “anything worth having is worth fighting for” and that includes yourself and your credit.
9. Short Term and Long Term Goals
There are going to be personal expenses or items that you want to reward yourself with. It could be a new car, a new house, or maybe a family vacation. It could be something more simple such as a new pot set for your kitchen. No matter what it is, divide the things you want into long term and short term goals. This will require that you plan efficiently and timely to achieve these goals. This will help you set dates and avoid procrastination.
10. Emotional and Mental Stability
It is hard to manage your life when your mind and emotions are not on the same page. Be sure to keep yourself healthy and maintain an active lifestyle (within your budget of course). It is hard to take care of business or think about the future when you are bogged down in “right now”. Try to keep yourself uplifted and when you feel down try to find the avenue in which to bring yourself back up.
Becoming financially stable and maintaining financial stability is not difficult, but does require hard work and discipline. Furthermore, most things in life require hard work and discipline it is just up to you to make sure you apply the effort to get the results you want. You may have to make some sacrifices, but ultimately it will pay off for you (literally) in the end.
Think you are financially stable? Check out our guide on buying a house.