For most people, if they lost their job tomorrow, they would have enough savings to get themselves through one month. That’s it. This can be a scary way to live- just look at the government employees in the United States, who suddenly couldn’t pay their bills.
If you would be in a similar situation after a month with no work, it’s time to get your finances in order.
Here are some ways you can manage your finances better in 2019:
Utilize credit the smart way
Using credit can be a good thing. After all, it helps build your credit score as you prove you’re a responsible lender. Where people get themselves in trouble, is when they can’t afford to purchase something at the time and choose to use finance, a loan, or their credit cards. It can be easy to assume you’ll be able to pay this back, but if the car breaks down or you have an unexpected bill, you may find yourself struggling to make those payments.
Services like 24Cash.ca are the perfect solution if you’re suddenly in a jam and need some fast cash. And there’s nothing wrong with utilizing these types of services in the short term while you’re fixing your finances. But you shouldn’t rely on credit just to get you through the month.
Work on your savings
If you have enough savings, you don’t need to worry about suddenly maxing out your credit cards or applying for a loan.
Your first goal should be to grow your savings. Aim to have at least six months of living costs in your savings account. That way, if you lose your job or experience another calamity, you’ll be able to focus on solving the problem- and not just scraping together enough money for rent.
Create a budget
Without a budget, it’s difficult to build up your savings. Often, people will pay their bills, spend money on going out and having fun, and then there’s no money left for savings. This is the wrong approach. Instead, you need to watch your spending and allocate a certain amount of money for the things you like to do. As soon as you get paid, immediately transfer money into your savings. After you pay your bills, the rest of the money can be used for whatever you like. Start small, but work up to saving approximately 30% of your paycheck so you can hit those goals.