Keeping your household out of financial hot water isn’t always easy and it takes the cooperation of an entire family. But it can be done and the best way is to keep on top of things and take steps to balance the picture before there is serious trouble.
These tips will help you organize and then recognize warning signs that might prevent upsets:
Create a realistic budget and then stick with it. A budget is not set in concrete and needs periodic analysis and tweaking to be certain it is still adequate. If there are changes to your income or new demands on the outgo, create a new budget to incorporate those changes.
Don’t buy on impulse. If you see something you feel you want, don’t make the purchase on the spot. Go home and think it over. Discuss with other family members. There’s a good chance you may, on reconsideration, come to the conclusion that you can do without the item.
Avoid sales. Purchasing a $300 item for $200 isn’t a $100 savings unless the item really is necessary. Staying away from temptation is easier than overcoming it on the spot with the item staring you in the face.
Get medical insurance if at all possible, even a stopgap policy with a big deductible is better than nothing in a medical emergency. Not having any cushion at all is inviting financial ruin if the emergency you hope will never happen happens.
Be very careful of charging. Charge only if you have the ability to pay for the item within your next pay period. Future income is always chancy. Try chucking all your credit cards or at least tuck them into a drawer and see if you can do without them for awhile. That exercise may help you look at credit in a different way.
Keep rent or house payments as low as possible. Promise yourselves something more elegant when your earnings have increased, then discipline yourselves to wait. If your mortgage payments keep you on the thin edge of your financial capacity, consider refinancing.
Don’t cosign or guarantee a loan for anyone else. Even though it appears safe that the other party will be able to handle the payments, a thousand things can happen. Your signature on the loan/sale makes you the primary borrower. The same holds true of entering into obligations with a spouse or significant other, particularly if you suspect he or she is not financially responsible. You’ll find yourself saddled with repayment if, for any reason, the other individual can’t or won’t pay.
Be careful of investing, particularly in such speculative ventures as real estate, penny stocks or junk bonds. Be conservative with your investments, sticking with certificates of deposit, money market funds and government bonds.