Family Finances: (part 2)
By now, if you read part 1, you’re probably frenetically tracking your spending and budgeting like a banshee. And wow, now that you know where your money is going, it’s much easier to plan how you really want to spend it – and when you stick to the plan, you probably find that you have some money left over. Now what? I’m glad you asked…
Financially Healthy Couples and Families…
3. Reduce their Debt. As you probably know, debt is often a big burden that weighs families down and increases financial pressure. Most of us are using debt far more than our grandparents did, and we’re feeling the constraints of debt. Debt makes us less flexible, as our current and future earnings are already committed to previous purchases. When a financial need arises in the present, like a home repair or a medical need, we can’t respond with real money, because our money is tied up in previous expenditures – aka Debt. When a financial opportunity arises, like an investment or a leisure activity, we can’t take advantage of the opportunity without incurring more debt and perpetuating the burden. There’s nothing worse than being on a “vacation” and stressing the whole time about how you’ll pay for it. Financially healthy families use their income to reduce debt and stay out of debt because they know the real imprisonment of debt. It’s not fun.
4. Money-Masters find ways to put aside money for future use – save money. That’s right, no matter how much you make, you’ll always
be broke if you don’t save money. Without savings, you’re always one paycheck away from crisis. That’s financial insecurity. Saving money is simply putting your future-self on payroll, today. When your future-self or future-family has money in the bank, that’s financial security. You can’t afford NOT to save. And if you’re saving, “hey dummy, I don’t have any money left over each month to save,” then I’d say, “hey dummy, I know, no one does until they work on steps 1 and 2, and probably 1-3. It’s ok… It’s a process. Get started with steps 1 and 2, and you’ll find that you have money to safe.”
I once had the opportunity to work through these steps with very low-income earners (less than $1000 per month) and each were able to reorganize their spending to save at least $20 per month. Over the year, they accumulated more than $100 in savings, which may not sound like much, but it provided a significant buffer of financial security for those families.
You can do it! For worksheets to help you get started, check out www.www.drmattmorris.com/smartmoney
