Year end personal financial review: Part 1
Are you coming up short on dollars each month to pay for basic needs?
Planning – Prioritizing – Practice. Use the three “P’s” to improve your financial situation.
With planning, any family or individual can adapt their spending habits to better match their available income. When individuals don’t bother to organize personal spending habits, their financial situation will probably get worse. Have you caught yourself following the buy now, worry later formula? Are you spending your last dime just before the next paycheck arrives? These are warning signs that a financial crisis is near.
Most people experience a financial crisis at some time in their lives. Everyone’s situation is different. How one is prepared to handle surprise expenses can make the difference. Having a family emergency fund is important planning. Individuals often claim they can’t afford a savings account or an emergency fund, because there is nothing left over to put in it. Break away from the “living in crisis” pattern. Plan now. Establish an emergency fund, by committing to set aside a small fixed amount each month. Pay yourself first.
Talk about money issues. Start with listing reasons for stretching financial resources. Before you get discouraged, draft a preliminary household budget. If expenses exceed income, look at options for increasing income, research possibilities for cutting expenses, ask others for their suggestions and check out community agencies to learn what services they offer. This process isn’t easy, but practicing self-discipline helps. How one weathers a financial storm, is something very individual. There are only two options: do nothing or make changes. If you choose “changes,” remember Planning – Prioritizing – Practice!
Plan first. Be willing to design a balanced personal financial plan. Start today. Michigan State University Extension has a number of money management tools to help individuals and families improve how they handle their personal finances. Take advantage of this resource, click on “Your Financial Plan” at the left column, then select “Monthly Budget”.