Living through the highs and lows of financial instability is exhausting. One week, you’re feeling absolutely fine. The next, you’re panicking about the contents of your bank account and wondering how you’re going to make ends meet. You can either endure this turbulence for the rest of your life or commit to changing your financial situation. Read ahead to find out how you can gain more stability by the end of this year.
Set Up An Emergency Fund
An emergency fund is your best financial back-up plan. It’s a significant amount of savings that you can contribute to regularly — but use rarely. It’s only meant to cover costs that are critical and unexpected.
It’s not for expenses that you should’ve prepared for, like utility bills. It’s for emergencies like flooding toilets, broken water heaters or stalling car engines. These costs are important because they’re unpredictable, and they have to be addressed immediately. You cannot put them on the back burner.
Eventually, you can save up enough to cover bigger emergencies that can affect your income, like job loss or illness. Ideally, you should strive to have three months of living expenses inside of your emergency fund. If the worst happens and you only have savings to rely on, you can use this simple stash without digging into future assets like your retirement fund.
What can you do if you don’t have an emergency fund available? You’re not alone. According to a GOBanking Rates survey, 38% of Americans have less than $1000 in savings to cover financial emergencies. Without the fund available, you have several options to resolve the emergency:
- Use the remainders of your monthly budget
- Put the expense on your credit card
- Borrow funds from a trusted friend or family member
- Apply for an installment loan online
The last option is an effective choice when you have no room left in your budget and no room left on your credit card to cover this expense.
If you’re in this difficult situation and you need a resolution, you may turn to a website like MoneyKey to learn more about online installment loans. The process is quick, straightforward and convenient. You can fill out and submit the application within a few minutes.
It will be easier to apply for an online installment loan on this website than doing it at a traditional bank. Banks often have strict standards for credit scores and collateral before approving a loan. And the approval and funding process can take weeks to go through. When you’re dealing with an emergency, time is of the essence. You need to resolve the issue quickly.
Uncover Your Bad Habits
You won’t be able to gain any sense of long-term stability if you don’t know the root causes of your current instability. Look through your bank statements and shopping receipts. Track your spending from this point forward.
Over time, you will start to notice patterns that you need to break. You spend too much money on impulse purchases. You rarely put funds into a savings account. You pay your bills late. Harmful habits like these need to be broken.
For instance, one of your bad financial habits could be spending too much of your income on impulse purchases. A study from CNBC and Acorns found that while 90% of respondents admitted to making impulse purchases from time to time, men were more likely to spend over $100 on the item. That’s a risky financial habit to have.
But, it’s important to know that you can break your bad habit. Here are some of the steps you can take to recover from impulse buying:
- Make lists before you go shopping. Don’t purchase anything that isn’t written down on the list.
- Avoid window shopping. Browsing a store when you don’t need anything is not a healthy hobby.
- If you’re online shopping, you should leave items in your cart for at least 24-hours before accepting the purchase. This ensures that you’re buying the item because you want it in general, not because of a sudden impulse.
- Unsubscribe from store newsletters and email lists. They bombard you with updates about new products, sales, and deals. Removing that temptation will make it easier to save your money.
Start Thinking of the Future
Financial stability isn’t a short-term goal. You want your financial situation to be a smooth road from here on out. Without future planning, you will find that your smooth road turns downhill or hits a dead end. Now is the time to start thinking about what you will want later in life, and what kind of savings you will need to make that happen.
For instance, it’s never too early to start preparing for your retirement. Collecting savings over the next few decades will help you manage your expenses in your old age. It will be especially useful if you don’t have an employer-sponsored pension or retirement savings plan. If your career hasn’t provided the nest egg for you, you should make one on your own.
According to research from the Census Bureau, approximately two-thirds of Americans don’t put any savings into a retirement account — this could be a personal savings account or a 401(k). Try your best to stray from that demographic.
Without retirement plans, seniors have to rely on Social Security as their main source of income. Lots of seniors work well beyond their retirement age so that they can earn more funds to cover expenses for housing, food and medical bills. And those who can’t work have to turn to their relatives or go into serious debt in order to get by. When you have little to no preparation, you risk having a retirement that is physically, emotionally and financially stressful.
These are some other ambitious goals that you could start saving for right now:
- Paying off student loans
- Starting a family
- Buying a car
- Buying a house
- Children’s college funds
- Moving to a new town/city/country
Gaining financial stability is not a task that you can accomplish overnight. It will take time and hard work to avoid pitfalls and build up your savings. By following these steps and sticking to them as the months go by, you should have a much better handle on your personal finances by the time that the year is over.
This content is sponsored by Mike John.