Life happens, and it often comes with a big price tag. You can quickly find yourself in financial trouble if an accident or unanticipated expense comes up. And, even small expenses can accumulate over time if you don’t watch your spending. To avoid risking financial stress, you need to plan ahead.
Emergency Savings
You can’t always predict when an appliance will break down, your car gets totaled, or you lose your job. If your first response is to pull out a credit card, you could soon be in huge trouble with debt. The high-interest rates on credit cards can get you into trouble in a hurry.
You can avoid running up credit card debt by establishing an emergency savings account. Make sure this account is separate from other accounts, and add to it on a regular schedule. Resist the temptation to dip into it for “wants”; save these emergency savings for true emergencies.
Good Insurance
Medical and dental emergencies can set you back quickly with sky-high medical bills. Good insurance can help you reduce your expenses. It can be helpful to accept any insurance plans your employer offers, including vision and dental.
There are also alternative savings plans for medical needs. Many people opt to use a dental discount plan instead of normal insurance. You can also find discount plans for prescription medications. In some cases, your prescriptions can be cheaper with the discount than your insurance co-pays.
A Realistic Budget
Setting and sticking to a realistic budget can also keep you out of financial trouble. Figure your monthly bills such as housing, utilities, travel, and so on, but also be honest about how much you spend on food, entertainment, and incidentals.
Then look at the big picture. You should sort your essentials from the non-essential expenses. You can identify places where you can save or cut if financial stress happens. You may be able to find a budgeting app that tracks your expenses automatically, helps you make financial goals, and lets you change your budget items as your needs evolve.
Everyone experiences some debt now and then, but when the amount you owe is too much to handle, it’s time to make some changes. You can avoid falling into financial trouble by planning ahead as well as meeting your immediate needs. Preventing debt is a lot easier than trying to pay it off.
Check out this article on aspects of your financial health you should pay attention to!
