We all want to have financial stability. We want to set up our future right so we can be financially stable. Nothing is certain about the future. The Great Recession was a testament to that. In fact, experts believe that we go through economic cycles. Some of them believe that the time for an economic crisis is at hand. If we will follow historical trends, the next financial crisis is around the corner.
If this is true, do you think that you have the chance to survive it? If you honestly look at your finances right now, do you think that you will be able to survive a financial crisis? For some households, the answer may be yes. For others, the answer may be no. If you think that you are one of those who are cannot survive the next crisis, what will you do about it?
8 tasks that you need to do to improve your financial future
Fortunately for you, there is a way to make your financial future more stable. However, you need to start working on it as soon as possible. Financial stability is not an overnight thing. You cannot expect it to happen in a few days. You need to gradually build it up.
The good news is, most of the tasks that you need to work on are quite simple. You do not have to be a rocket scientist to put your finances in a stable position. You also do not need the help of a professional. While they can make things easier, there is nothing that they can do that you cannot accomplish yourself.
The important thing is to start working on stabilizing your finances as soon as you realize that there is a problem. To get you started, here are the small changes that you can do to achieve financial stability.
Open a separate savings account
Saving for the future is one of the best ways that you can make your financial future secure. According to the data from PewTrusts.org, liquid savings is one of the best ways you can prepare and survive a devastating situation. A lot of Americans believe that they should have at least 6 months of income in their emergency fund. However, statistics reveal that 85% of them fall short – and a great deal at that. The statistics reveal that a typical family should have more than $9,000 in their emergency fund. What you need to do is to set up a savings account and consistently put aside some money that will hold your emergency cash fund. You want it separate so you will not be able to access this money. This is very important because you need this intact. You do not want to fall into the temptation of using this for unnecessary expenses.
Be specific with your spending plan.
A plan is a great way to establish control and direction. You want to have one for your expenses – and you want it to be as detailed as possible. The goal is to keep yourself from overspending. When you can control your spending, it is very unlikely that you will fall into debt. Every penny spent is planned and thus prepared for ahead of time. Just make sure that the detailed spending plan that you will create will be followed. Otherwise, your efforts will be wasted.
Monitor your credit report every 4 months.
This is another way that you can keep your finances stable. You want to be able to monitor any credit activity that is done under your name. This is to help control how much credit you have borrowed – to ensure that you can afford to pay for all of them. This task will help you achieve financial stability because it will keep your credit level in check. Not only that, it will also help you monitor any signs of identity theft or errors. You can report any unauthorized credit activity so you can protect your credit history from being ruined because of someone else’s doing.
Never pay the full price.
Another task that you can work is making sure that you never pay the full price for anything. If you can buy in bulk and you are sure that none of it will be wasted, then buy more so you can save on the price per piece. You can also use coupons. When there is a discount, make sure you will avail of it. If you have a rewards credit card, use it wisely so you can enjoy the rewards. This task will help train your buying habits so you get used to thinking before you buy. This will help control any impulsive buying habits that you may have.
Shop in thrift stores.
Contrary to what you may believe, thrift stores are not for the cheap people. It is not a place where you will find unwanted second-hand clothing or items. Thrift stores and bargain shops can really help you save money without compromising your fashion sense and comfort. There are so many great finds from thrift stores – you just have to be very creative and ingenious about it. According to the data published by the Association of Resale Professionals on NARTS.org, 16% to 18% of Americans will go to a thrift store to make a purchase in one year. Believe it or not, there are items that you are better off buying used. It will not only save you money, it will also help you make smart choices about your expenses.
Organize your documents.
This might not seem like something that will help you be financial stable. While it may not directly accomplish that, it can help you manage your finances. When you are implementing financial management habits, you can eventually lead yourself towards the right path to financial stability. Organizing your documents literally mean keeping an orderly file of your documents. This includes keeping records of your debt payments to ensure that any zombie debts will not haunt you. It also means keeping important files from being lost.
Negotiate a lower interest rate.
This is also something that will help you save money. Some people are intimidated by the thought of talking to their creditors. Don’t be. It is your right to call them and negotiate for a lower interest rate. If you have been a good credit user and you show a good payment behavior, you do not have to be scared of your creditor. You can rely on your track record to negotiate for a lower interest rate. After all, you have proven that you are a low-risk borrower.
Know your tax breaks.
Tax payments can be costly – but only if you do not understand what tax breaks are. You need to know your rights and the areas in your finances and lifestyle that will help you get deductions from your tax payments. Feel free to research this because it will really help, if not lower your taxes, increase your tax refund. The average tax refund at the moment is more than $3,000. You may be entitled to receive more than that if you know what tax deductions you are entitled to get.
How to achieve financial stability
Securing your financial standing is not really that complicated. However, it is something that you need to continuously exert effort on. When you have become financially stable, that does not mean you will no longer do anything. At the very least, you need to maintain what you are doing to reach that level of financial stability.
To help you, here are some tips that you can follow.
- Lower your debt. We are not really saying that you should eliminate your debt. You can continue to use it – as long as you keep it low and manageable. If you plan on using your credit card, try to limit the amount you will spend so you can pay it in full when the billing statement arrives.
- Increase your net worth. It is also important for you to concentrate on increasing your net worth. If you have a house, try to expedite paying off your mortgage so you can own more of the equity. Invest on things that you know will increase your personal net worth – and not decrease it.
- Diversify your income. This is not just about investing in stocks or bonds. While that is one way to diversify your income, there are other ways for you to do this. You generally have to work on earning from multiple sources. If that means getting a second job, then that is what you should aim for. According to the data from BLS.gov, 7.2 million Americans between 2004 to 2013 held multiple jobs. Apparently, the higher the educational level, the more likely they are to hold more than one job. This is a trend that you can catch up on. If you can find a job or start a business that you love to do, the extra effort on that other source of income can help you find financial stability. You can even look into your own home. If you have an extra room in the house, you can have it rented out.
- Build up your emergency fund. Another thing that you need to continually do is to keep an eye on your emergency fund. Obviously, this is a fund that you will have to use every now and then. Make sure you return whatever you get from this stash of money. That way, you will still be secure in case another financial trouble looms on the horizon.
Financial stability is something that you need to work on as soon as possible. Not only will this make you feel secure, it will also remove any worries that you may have about the future.