Brandi RhoadesEmergency Financial Planning: Part 1
June 2nd 2008 20:38
Economists across the board are pessimistic for 2008 and believe that there is large potential for a boom in job-loss. That means that now is the time to do some creative financial planning, so that when the bad times hit, we will be ready. Prevention is undeniably better than cure.
Having a Positive Outlook on Personal Finance
The first thing you need to do is stop, take a deep breath, look in the mirror and say, “I’m going to be ok.” A positive frame of mind and avoidance of self-blame are the most important factors in improving your situation, whether financial, emotional or even sexual. Life happens, bringing with it the good and the bad. Sometimes you get to enjoy the better times, sometimes you need to work hard to weather through the unfortunate times. That’s life and you’re a strong, intelligent and capable person.
Creating A Powerful Financial Plan That Will Prepare You For The Future: A Realistic Forecast
The secret of personal finance is being realistic. Many financial planners will unabashedly advise you to stop smoking after you’ve been buying a pack a day for the last 30 years. Others will explain how you’ll need to avoid higher priced food items like meat and fish, or simply stop going out to restaurants and bars with friends and family.
While living like a pauper hasn’t ever hurt anyone’s bank balance, it never did any good for their self-esteem or the way others viewed them. Becoming an obsessive savings-extremist or failing while trying to become one are just as destructive to your lifestyle and happiness as being up to your ears in debt. Friends and family should never be viewed as unfortunate expenses, just as they shouldn’t be viewed as potential sources of profit. The trick, as any mother will remind you, lies in finding the golden balance.
But just as ridiculous saving tactics should be avoided, beware of setting lofty and extraneous financial goals. The desire to lead a lavish lifestyle is a well-marketed death-trap. Believing that you’re fast on your way to becoming a millionaire is an excellent mental foundation for getting you to spend like you’re already a millionaire, which you should probably know is the universal nemesis of financial planning. There is nothing wrong with setting reasonable, positive and attainable goals, even thoroughly optimistic ones. Leave the grandiose hallucinations to the people who next year will be wondering why it all went wrong.
Step 1: Assessment
Now that you’ve had ample time for self-encouragement while looking into the mirror, all the while admiring your attractiveness, it’s time to look again and, using your newfound total lack of shame, be totally honest about your current financial position. Basically, how much do you have vs. how much do you owe. Oops… the mirror might not be looking so good anymore, but don’t turn away. This part of the process is critical, because like the golden rule states above, it gives you a realistic foundation on whose stability you’ll be able to make the right choice when choosing a direction in which to go.
For example:
“I owe $5000 in credit loans which I’ve been late for recently, and I still need to pay bills for this month. i.e. I need to do a measured savings lockdown, work really hard for a month or two and pay off the debt asap.”
Or…
“I’ve been ok about spending and have a few thousand saved in the bank. Maybe I should consider my investment options or even a timed savings account.”
So, it’s all nice and good to advise someone to do a self-assessment, but how is it really done? Please read Part 2 (to be released June 5th, 2008) for an easy to follow, in-depth step by step guide.
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