Life is made up of unforgettable experiences — love, marriage, fulfilling work, and the birth of a child. It is also made up of amazing sunrises and breathtaking sunsets. Between the next sunrise and sunset, a lot can happen.
Because, between the next sunrise and sunset, life can throw unexpected curveballs. Such as divorce, disability, illness, death, and a global pandemic.
Are you financially prepared?
We need to change our relationship with money (#ad). Here are some ideas to help you prepare for the unexpected.
1. Know where it is going & spend less than you earn.
Look at your bank or credit card statements over the last 3 to 6 months. Are you spending on things that align with what you value?
What can you reduce or eliminate? E.g. entertainment, subscriptions, banking fees. If you are an emotional shopper, become aware of when it is you are likely to shop impulsively. Find alternative ways to meet those emotional needs. Call a friend.
Before going shopping, decide how much you can spend and stick to it. Same with Christmas, birthdays, and special occasions. Refrain from using credit.
2. Repay your debt.
Don’t get into a debt trap. Create a plan to pay it off. Pay off your credit card each month. If you are not able to pay it off, pay as much as you can. Pay off high-interest debt. According to Equifax, the average debt per Canadian consumer (including mortgages) reached $71,300 in the first quarter of 2019. Debt robs you of your future!
3. Save with a purpose.
What are your financial goals — within the next 3, 5, and 10 years? Is your spending aligned with your goals?
4. Create a budget with your goals in mind.
Create a budget aligned wth your vision for your life. Use the 50/30/20 rule. 50% on necessities, 30% on lifestyle, and 20% should be allocated to investing and saving.
5. Pay yourself first.
Instruct your financial institution to automatically debit a portion of your paycheck and direct that to a savings plan each time you get paid.
6. Get the family on board.
Communicate your concerns regarding money with your family. And get them on board with the vision of where you’d like to be, financially. As a family, find creative ways to save money.
7. Protect your family in the event of your loss of income.
Have a plan to financially protect your family in the event of your inability to earn an income. Your loss of income can come from a disability, illness, death, or being laid off. Purchase life and disability insurance to protect your family in the event of your death or disability.
8. Build an emergency fund.
Build an emergency fund made up of six to twelve months’ income to protect your family from unexpected financial expenses.
9. Have an estate plan.
No matter how young you are, you need to have a written estate plan in place. This comprises the minimum of a Will and a power of attorney. A Will provides instructions on how you would like your assets distributed. And a power of attorney is to provide instructions in the event you are unable to make decisions on your own.
10. Educate your self in the area of finance.
Creating new financial habits is going to take a mindset shift. It takes time, but you’re worth it and your life depends on it.
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