Last time, we talked about the importance of making good financial choices, especially given the state of the economy, with everything costing a lot more than it has in the past. That is still true, and likely will be for the foreseeable future. Economists can debate whether we are in a recession or not, but putting a label on it is far less important to those who need to be able to figure out how to make their dollars stretch more than they ever have before.
Making the best financial choices is not something that just happens. Think about the time you bought your house or a new car or went to college or bought something that you really wanted. Think about the research that you did, the people you spoke with. Maybe you sought advice from a friend or family member whose opinion matters to you. The same should be true here. You need to arm yourself with all of the facts so you can make informed decisions that do not create more problems.
The first step should be making sure you have a firm grasp on your financial situation. Knowing how much money is coming in, and the expenses that need to be paid, is critical to helping determine how much, if any, extra money there is your budget. It might be painful — and even embarrassing — to sit down and map out your finances, but without it, you will never know what you can afford, or not afford. Think of your budget like a map — you will never make your destination without it.
DON’T SET IT AND FORGET IT
Budgets need to be maintained and updated. Publicly traded companies are required to disclose their financial performance every quarter so shareholders can see how the companies are managing their finances. You need to update your budget, too. Expenses can vary from month to money, as can income, and knowing that will help you make good choices.
Having the information, though, is only half the battle. Armed with a budget, it now becomes imperative to make sure that you are living within your means. Extravagances like vacations create amazing memories, but can lead to a long period of financial turmoil.
Finally, don’t be afraid to ask questions. When contacted by a debt collector, for example, ask about whether a payment plan is possible. In many cases, collectors are empowered to work out payment plans to repay debts over a period of time.
Making good financial choices is incredibly important and can save you from a lot of problems. Put yourself in a position to make the right choice by making sure you are doing everything you can to stay on top of your financial situation.