The economic slowdown has demonstrated just how important it is to be prepared financially.
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.
When taking on fiancial committments its important to think about the “worst case scenario”. What would happen if you were made redundant? Could you keep your head above water financailly? Too often we try and keep up appearances and to heck with the expense!
Whilst we like to give others the impression that we are doing well, we cannot kid ourselvs forever. Rather than live on a finacial knife edge, it is sometimes preferable to be prudent if only for peace of mind.
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.
Saving money is often considered by some to be boring. Not only do we not have anything to show for it, we can also feel that saving is a form of deprivation, and we end up either chipping away at it and consequently our savings do not grow, or just giving in and buying a new, expensive item, inspired, in part, by the common thought that “I’ve never had so much cash saved before, now I can afford….” whatever it was they wanted.
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.
This way you can develop a powerful mental attitude that will begin to make you see the benefits of budgeting and saving in a new light, one of peace and security, as opposed to some sort of restriction on your life.
Taking care of your money is so vital. But for a few, things can get out of control and they are forced to look at the unpleasant step of bankruptcy. If you need further free information on declaring yourself bankrupt, please visit www.declaringyourselfbankrupt.org