Finance and money forms a larger
part of our lives. Starting a business, running a business, saving money,
buying a property, saving for that car, sending your kids to school, borrowing
to start a venture or just raising capital for anything important, all forms part of our existence.
Stability in finance is one crucial area that most of us shy away from.
Unfortunately, in some of our societies, mediocrity and “false riches” are
celebrated instead of reality.
I have seen most people around town,
cruising the best four wheels on loan, some celebrating the best and
expensive birth days and living a life of affluence without any investment. I
have seen those who go on weekly and monthly buying spree of the latest
fashion, expensive jewelries just to show how successful they are. And I have also seen that most people are
financial unstable but they do not know it. They only realize it very lately
after all the excitements are gone.
The truth is that most people in our
society have one thing in common. They all live with money struggles. If
you have money struggles but do not know or you are aware already but do not
know how to plot your way out, this piece is for you. You will understand signs of money
struggles and how to get out of it. In all I have written, I would want you to
be very honest with yourself as you can never lie to yourself about your
struggles.
The following are 5 clear signs you are
financially unstable and also how to deal with them. I will challenge you to
look inward and decide today to deal with your struggles by taking the bull by
the horn.
1.
You Do Not Have Emergency Fund
In simple term, an emergency fund is
a fund that is kept as cash account to be able to foot bills on emergency
such as unexpected financial disaster. An ideal emergency fund should be a fund
that can cover a living expenses of your home for between three to six months.
But if you do not have any or have little of this, then you are living at the
mercy of disaster and anything can trigger you into financial mess and
powerful mess. It means you can extinguish into financial death at any time. Unfortunately, most of us are living
from pay cheque to pay cheque
It
is important that you start an emergency fund account as it holds guarantee for you in
terms of investment. In essence, savings accounts are good for emergency funds,
while stocks are bad. Your emergency fund is a financial disaster recovery
fund. Therefore a loss due to bad financial decisions or lost of payment of
your salary if you work for few weeks will see you falling back to your
emergency fund for recovery. If you do
not have an emergency fund, you will need to start one today. All you need to
do is to go to your bank and open a savings account and start saving diligently
and consistently on weekly or monthly basis without withdrawing from that
account at all. You will be glad you did when the need arises.
How
to build your emergency fund
There
are no one best ways to build your emergency fund. But fundamentally, my advice
is that you should start today with little cash. You can build it up a little at a time. The
most important thing is to get started and to remain consistent so that over
time you can reach your emergency fund goal.
These are some tips on how to build
your emergency fund with success:
- Segment it. The easiest way to succeed in building your emergency fund is through segmentation or breaking down and going little by little. Decide how much you want to start with as well as your goal and then be consistent in saving such amount into your account, You will be glad once you reach your goal.
- Convert Wasted Monies. We all have leaks in our finances. Almost all households have wastes that are up to about 10%. You can identify these leaks and convert them to your emergency fund.
- Automate Your Funding. This undoubtedly is one of the best ways to save to your emergency fund without your remembering. Automation will help in easing this system. All you have to do is get a standing order with your bank to credit your emergency fund instantly from your main account – salary or other account- every month,
- Celebrate Funding Achievement. It is worth celebrating once you reach a particular goal. Take a celebration with your household once you reach a short term target of your funding, this way, they will all understand your goal and why you are involved in this saving system.
2.
You don’t sleep at night due to financial worries
We all will surely experience
various degrees of stress in terms of our finances. But it does not have to be
all the time. If you are losing sleep over money worries, how to foot the next
bill or a huge debt steering you on your face or you worry about how to buy
those luxuries of life, watch it as it is a bad sign of financial
instability. Most of the time, this can
result in stress and sickness. Losing
sleep will affect you and your ability to even smartly look for the money in
your life, so stop.
What you need to do?
1.
Worry Less: Worry will not solve
your problems. All you have to do is to look within and see where there are
leakages and close them in your financial spending. Draw a budget for each
month and follow it to the later.
2.
Be Positive: Just know that things
will improve. Be positive and avoid mistakes that results from negative
emotions as they could be damaging to your health and financial future
3. You
are broke each month after paying your bills
You
need to live frugally. Some of us eat above what they earn while others do not
have enough after paying the bills, The fact that you are able to pay your
bills at the end of each month does not also mean you are financially stable if
you do not have extra money left.
You
need to close up and check your spending as well as deal with this situation
decisively. You need to make sure that you have extra for savings each month
after paying your bills each month, therefore, you must have a saving culture.
Not having a saving culture is financially suicidal.
4.
You Avoid Discussion about Money Matters with Others – Including Your Spouse
Do you live an avoidance lifestyle
when it comes to discussing money matters? If you avoid money discussions with people in
the public, or at home even with your spouse, then there is a clear danger you
are unstable financially and you need to check it. Money matter is one of the
fundamentals you need to discuss with people and say it plainly without hiding
anything.
It has been shown and proven that
many people with money troubles and challenges avoid discussing money matters
with other, especially finance. This is one reason money is one of the biggest
issues of disagreement in marriages. Even if you avoid discussing money matters
with your spouse to allow peace to reign in your home, you will find out that
in the end, it will result in a big family crisis or differences and this is
dangerous for your home.
5.
You Have More of those Stuffs than Necessary, especially above your income
Most people’s financial instability
stems from the fact that they are among those who buy things at the spur of the
moment without financial thought for the future. If you are having those stuffs
in your home, or you indulge in a lifestyle that is not necessary but also above your income, then you
need to check it. I am not against buying of good clothes, that nice watch,
cars, jewelries etc. But if you are financially savvy and frugal and ready to
save for the future, then you need to apply what Author and teacher Brian Tracy
calls Delayed Gratification. It is better to save than to go on buying those
stuffs.
Most people are riding on nice cars
on loan even when they do not need such cars. They do it to show off and let
the society know they have arrived. This is a sign of financial instability and
you will certainly pay for it in the future.
Avoid that spending in that
restaurant, that car, that jewelry that you do
not need or is higher than your income status. This is pure financial
indiscipline and so you can avoid it . Not heeding to this will result in other
problems that we have also discussed above.
I know you will be financially wise. Let me read from you
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