Like most areas in life, balance is the key to finding a happy and sustainable course. But finding it can prove difficult, especially in the realm of personal finance, because it is easy to gravitate towards extremes. Sometimes it is not making it from paycheck to paycheck, and other times it is steak dinners and five star hotels. But if you want to find a healthier place in the middle, here are a few smart tips for working towards financial stability.
1. Pain and Pleasure
In a recent letter to his children published in the Globe and Mail, Canadian Chris Brown advised spreading out the pain of saving and the pleasure of spending throughout your whole life. “Don’t save so much now that you’re eating Kraft Dinner every night, and don’t spend so much now that you’re eating Kraft Dinner every night when you’re 75,” writes Brown. “Care for yourself equally at all ages.”
Granted there may be seasons of scarcity and seasons of plenty depending on your job and the economy at the time. But by working to save during good times rather than overindulging, you will be better equipped to weather the tough times without drastic lifestyle shifts.
2. Avoid Debt Whenever and Wherever Possible
Try not to spend where you don’t already have money. Getting rid of credit cards, switching to debit or using checks and cash can help to significantly cut spending because you can only purchase what you have enough money for right then.
Also, try to anticipate and plan for bigger expenses like:
- Car repairs
- New appliances
- Doctor’s bills
- Monthly charges (i.e. rent/house payment, insurance, groceries, etc.)
Being more conscious of upcoming expenses will encourage you to buy less and help prepare your bank account for when the bills do arrive.
When in super tight spots, many turn to family, payday loans and pawn shops. If you are going to use a service like TitleBucks.com, be completely sure that you understand the terms of the loan and will be able to pay them back within the timeframe allotted. And work towards more regular savings so that, in the future, you won’t be dependent on short-term loans.
3. Balance in Investments
If you have a portfolio of stocks, bonds, property and other investments, take the time to balance (and then rebalance) where your assets are allocated. You want to buy at minimum, three or four different types of investment. This way, you are prepared in the event that one suddenly tanks. And as you near retirement, you will want to examine the situation again and move away from riskier investments because the time you have to recover grows shorter.
It may take some time and careful planning to achieve a healthy balance in your finances. But with perseverance and self-control, you can work towards a more stabilized financial outlook. Then you will be better prepared for the future and able to enjoy the present as well.
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