It seems that most people are always expecting bad financial news, or hear nothing except bad financial news whenever they turn on the television or check their Twitter feed. Check out the news wherever you are and you’re likely to see a lot of reports about inflation, budget cuts, people going bankrupt, interest rates increasing, middle class and working class families seeing fewer wage increases while the price of living seems to continue on a seemingly unstoppable upwards trajectory…
It’s all pretty stressful, that’s for sure. And it’s leaving a lot of people more uncertain than ever when it comes to the state of their finances. But worryingly – and, perhaps, given all the information and bad news I’ve just highlighted, surprisingly – most people still don’t seem to be paying enough attention to their finances. Sure, they may know on some level that they’re doing okay, or that they need more money, or that they’re in some kind of dire financial trouble. But not that many people seem to be intimately aware of all the things that factor into their financial lives.
It’s pretty understandable, to some degree. While it doesn’t take someone with a master’s degree in finances to get your head around everything, we’re still dealing with some pretty convoluted and heavy stuff. When approached with a bunch of numbers and economic factors and implications, a lot of people tend to feel a bit cross-eyed.
It can all be pretty overwhelming, and the fact that they’re so important to our lives can actually introduce pressure and stress that makes gaining a rational understanding of everything more difficult as opposed to easer. Sure, we know on a surface level about just how important a lot of this stuff is. But does that make it easier to take it all in… or harder?
With this in mind, a lot of people tend to become very passive when it comes to their finances. Not the safest or smartest of approaches, but there you go. Many believe that as long as they don’t go crazy with their spending and keep bringing in a steady paycheck that things will eventually work themselves out.
But, as I’m sure a lot of readers know, perhaps from personal experience, life and finances simply don’t work this way very often. Not only do things have a tendency to not take care of themselves, but things also have a tendency of getting worse very suddenly! The amount of factors that affect your finances without even a moment’s notice is quite scary to think about.
This is why it’s so important that people become less passive when it comes to their finances. People need to start taking the reigns and really take control. You need to be active when it comes to looking after your financial health – and that means coming to intimate terms with your various financial situations. So we’re going to take a look at the things you should be thinking about.
Your ultimate goals
When you want to measure the health of your personal finances, then you’re going to need some sort of measuring stick, right? So that’s why you need to figure out precisely what it is you want to do with your money. A lot of people have loftier goals than merely paying the bills. They want to raise enough to buy a house, or finance a family, or go travelling more often, or to leave their current job in order to pursue their own business. So you need to ask yourself precisely what it is that you want to do with your life. Because, in one way or another, the status of your personal finances is going to affect the feasibility of attaining that goal.
You know that old clichéd piece of advice that tells you to write lists of your goals and then prioritize them? Yeah, I’m going to tell you to do that here. It’s something that a lot of people don’t bother doing. They keep vague dreams in their head. But the simple act of writing things down and think really practically about them really is the first step in making those dreams so.
Find your short-term and long-term goals. Find the ones that are the most important to you. Find out precisely what you would actually need in order to achieve those, because they’re going to relate to the amount of money you have sooner or later.
Potential problems and solutions
When you take a good look at your situation, you may find a bunch of problems. Don’t start panicking. Be thankful that you’ve taken the steps to actually properly define these problems – because you’re now in a much better position to be able to do something about it. Ensure that you get this essential information by reviewing all of your recent bank statements, transactions, outgoing payments, and any other financial obligations you’ve got going on now or will have to deal with in the near-future. You will then have a good idea of what your situation is, and what problems you may be facing.
So what are the most common problems that people face in this area? One of the most common is probably that of debt. It is, of course, unlikely that you’ve been in debt and had forgotten about it! But when people have automatic payments going out each month for their debts, they tend to forget about what position they’re in with regards to that debt. When you sit down and review your debt scenario in detail, you may find that things aren’t quite what you thought they were, which isn’t always a negative: you may find you’re closer to paying off your debt than you though!
Issues that people often don’t find out about are things like bad credit. This is something that is often caused by the aforementioned debt problems, but there are so many other factors that can contribute to bad credit. This, of course, can become a big problem if you need to take out some sort of loan. But if you’re in this position, it’s possible that you could actually kill two birds with one stone. The right kind of loan can not only be attained even when you have bad credit, but can actually assist you with rebuilding that credit. You can find out more about such options from sources like Personal Money Store.
A lot of people seem to treat the word “budgeting” as though it’s some sort of buzzword that describes an act that isn’t really realistic for the average American. Perhaps it’s because of the aforementioned passive attitude that many American individuals and families have taken with regards to their money. This approach can often make the more active measures sound like much more effort than they actually are. And there are few things more financially active than creating long-term and short-term budgets, right?
But if you’ve followed the suggestions so far, then you have so much of the information you need to create a budget for yourself. Making sure that you check your financial situation on a regular basis is really just the start of it. The best way to ensure that you really keep on top of all the monetary goings-on in your life is to start figuring out what you can afford to spend on a certain basis and then stick as rigidly as possible to this plan.
A budget really is the best way for you to get your money working for you. It’s also the ultimate way of ensuring that you’re saving a good and consistent amount of money – and this is definitely something that everyone should be doing!