Coach Suzanne details the life of a modern family. Being remarried involves a lot of blending; finances, child rearing and so much more.
The stock market crashes, you or your spouse lose your job, you have another child, your car breaks down, someone in your family faces a medical emergency; are you prepared? Financially speaking. most of us aren't. We live each day saying, "I plan to work 30 more years; I have plenty of time to build a retirement fund." "My job is secure; I have been there 10 years and they couldn't survive without me." "How much could another child cost us? We already have two." "We have two new cars and insurance; no big deal if we have a breakdown." "My family is relatively healthy and we have insurance, so we don't need to worry about medical bills."
Sound familiar? I know I've rationalized these thoughts in my head. The reality is even in your late twenties and thirties, preparing for financial hardships and your future is a necessity. Here are some tips to get you started.
1. Get out of debt. First and foremost, get out of debt! Debt is like an anchor holding you down while you try to save for the future. With interest charges and fees you end up paying many times over. In addition, you never seem to get ahead and end up with no money left over to save for your future. Attack your debt first, even if it means you are not saving much. Consider a DMP, make a commitment to making double the minimum payment on your credit cards, or, if you are in deep, consider a DSP to settle off what you owe and start fresh. Think of how much you will be able to save when those debt payments are no longer part of your monthly budget!
2. Adjust your lifestyle, now. This is as simple as living within the means you set for yourself. Just because you get a raise, bonus, inheritance, or tax refund doesn't mean you have to spend it. Sock it away for your future. Consider living on one income and saving the other; this post, written by Peter Anderson, explores this idea as he and his wife prepare for a child. You may need to make some changes: only eat out once a month, vacation only once a year or two, and use the mentality "save to plan", instead of "plan to save." In doing so, you may find living on one income is not so hard, and your savings will grow much more quickly.
3. Establish an emergency fund. None of us are immune to financial hardships and preparing for them will help keep your financial future on track. After you have paid down your debt and adjusted your lifestyle, sock away some money for the unexpected. For months when you have money left over, add more, for months where you have a shortfall, know that you can do better next month. Continue to build up your emergency fund until you have six months worth of income saved, then you can focus on savings for your future.
4. Pad your income. Are you or your spouse able to work a part-time job or do freelance work? As we get older, the ability to "keep up" starts to diminish, so take advantage of your youthful spirit and energy while you can, to build your wealth for the future. For tips on becoming an entrepreneur check out the Entrepreneurial Money Management blog.
Who knows what the future will hold, but being prepared for the unexpected and changing your lifestyle now will lead to a brighter financial future.
Do you have ideas for saving for the future? Please share them in the comments!
You have read it a million times on the CareOne website, there is no silver bullet for debt. You have to invest MORE time and MORE effort in getting yourself out of debt than you did getting into it.