You know what my biggest financial fear is? Not being financially secure. It's crazy that I've only recently been able to realize this. I guess that just comes with getting older and taking a step back and saying, "Oh sh*%, I don't have enough savings to sustain my current lifestyle for too long!" or "Why did I spend my entire 20's living at my means and not focusing on building wealth?!?" Managing finances is critical to your financial independence. Below I have 3 mistakes you might be making and ways to fix it.
Mistake 1: Not having an emergency fund
One of your savings priorities should be an emergency fund. While it isn't glamorous, this underappreciated workhorse really pulls its weight during hard times. Having cash on hand that you can use for an unexpected expense, or to pay bills if you lose your job, is vital because it can help you avoid having to rely on credit or tap your retirement savings. If you don't have emergency savings to fall back on, a minor money shortfall can quickly turn into a major cash crisis.
Tiff's Tip - Aim for at least 6 months of expenses saved in your emergency fund!
Mistake 2: Only saving what's left over
Do you continue to worry that you're not saving enough? Do you routinely rely on credit rather than cash to pay for the things you want or need? Rather than blame this financial gap on your income, look a bit deeper, because the real culprit may be the lack of financial priorities. If you don't know exactly how you're spending your money and you haven't set financial goals, it's unlikely that you'll see much financial progress. Go back to basics by preparing (or reviewing) your budget. If you tend to save only what you have left over every month, you can put yourself on a more disciplined course by having a fixed amount taken out of your paycheck automatically for retirement.
Tiff's Tip - Treat your savings like another bill. Set up automatic transfers from your checking account to a savings or investment account monthly. Save first, then spend what's left over!
Mistake 3: Not asking for help
Even if your finances are in good shape right now, you may be overdue for a checkup. Reviewing your finances is especially important during periods of volatility because it can help reveal potential strengths and weaknesses, and identify changes you might need to make to adjust to the current economic climate. And if you're already in financial trouble, don't let fear or shame prevent you from asking for help. Facing financial problems early may help you make a full recovery. Many creditors are willing to work with you, but this may be much easier while your credit is still good, and while you still have time to turn things around.
Tiff's Tip - Talk to Me! Reach out to Cents Savvy for assistance or another trusted financial advisor that can help you understand your financial situation and put you on a path to financial independence!