Simple Tips On How To Prevent A Personal Financial Crisis
Financial Crisis Prevention Methods Are Everything
Once we have identified our budget is tight, It’s very important that we all use prevention methods to avoid a financial crisis. When times are tough the focus is often on what we can’t afford. The things we don’t have and the life we are not able to live without the money we once had.
The difficulty with finances being tight is that financial stress and depression over finances is not really considered until it happens. That short term feeling or splurging money or not preventing a financial crisis is worth it at the time.
Preventing a financial crisis is not about being able to afford a big tv, a fancy car. Those things are all achievable after you have begun to rebuild your life. I have experienced Financial Devastation. The most important thing I would like to pass on is that the hardest part was not losing monetary items.
The hardest part was before I lost everything. This is the time where you are dealing with the companies and people you have disappointed. Dealing with the stress of not being able to make ends meet while trying to hold onto assets leaves a person feeling desperate and quite often, unwell.
I didn’t understand this right away, this realisation came through Bankruptcy. This is the end of the line. Once you are protected by bankruptcy you no longer need to answer to daily calls from debt collectors. You are no longer waking up to the world where you are trying to survive. It’s unfortunate the lesson comes this late for some.
Bankruptcy is a 7 – 10-year sentence. This means you will wait up to 10 years to be able to rebuild your life. You can put things in place in the meantime, you can work your guts out and pay cash for everything until then. Bankruptcy can often be prevented, but acting early and being willing to sacrifice is often the key.
Simple Tips On How To Prevent A Personal Financial Crisis
- Don’t Let Yourself Go Without
It’s all too tempting to splurge when we have occasional leftover money. I already have my small “happy” items I buy each week. If I have leftover money then it’s used to save or pay bills in advance because I have already “treated myself”.
These treat items are small. But they make me happy. I have a budget of $50 a month at Thrift Stores which keeps my shopping instincts under control and often I save money on things I would normally buy brand new. I have trained myself to realise that the feeling of buying a new shirt from Kmart for $10 is the same feeling I get from a $4 shirt from Salvos (it’s often a far better brand and lasts longer).
My “Payday” treat is a boost juice and 2 Chocolate protein balls. I know right? easily pleased. I get the same satisfaction drinking my boost while thrift shopping than I do from a $30 Restaurant meal, Drinks and taxi ride home. That doesn’t include babysitter fee’s if you have children. It’s about sacrificing in the short term for long term gains.
If you starve yourself of treats you are at risk of having a spending spree when it all becomes too much. When you do come into bonus payments it makes it easier to spend the whole lot because you have gone without for so long.
It’s also important not to treat things you NEED as luxury items. I know women who go without supportive underwear and I have spoken to men who don’t get their hair cut regularly because they see it as a luxury. Presentation in any employment is important and your self-confidence is valuable when managing your budget and your life.
- Buy Common Household Products In Advance
Buying things in advance is also a great prevention method if you have the spare cash. So if you see an extremely cheap deal on something you regularly use around the home, don’t pass it by. Time flies and before you know it you will be out of laundry powder kicking yourself you didn’t take up that bulk deal now that you are paying full price.
- Keep A Spare Change Tin For Shop Runs
Keep spare change in a tin for shop runs. An example is going to the shop for bread and milk. Department stores are designed to have us walk out with more than we need. If you only need bread and milk then you only need $5.
Leave your wallet at home and only take $5. This avoids picking up extra non-essentials and you will avoid buyers remorse which leads to more impulse spending down the track. Often the self-medicating of buyer remorse is simply more spending. Humans, we are interesting creatures.
- Buying Your Children’s Future Wardrobe From Thrift Stores
Buying ahead can be done with clothing, especially children. Shopping at thrift stores keeps my clothing bill for my children very low. They also enjoy some of the best brands on offer, brands I could never afford. During the end of winter/summer, Thrift Stores will discount the clothing extremely low as they don’t have the space to store it. I buy two sizes ahead so I never have to worry about finding the money during a season change for kids clothing.
I also keep my eye out for items in excellent condition for future use. Examples are School Items such as pencil cases, school shoes, bags & hats. These are things my children either lose occasionally, wear out or need to start using. If you child is starting school next year, begin looking around now. I have 3 Pairs of TOP BRAND school shoes in excellent condition that cost around $4 for the next two years of schooling. A saving of almost $200 RRP.
- Take The Time To Shop Around
Shopping around is also another prevention method. Sometimes the time is worth it depending what is available. For example, locally I have choices between Aldi, Coles & Woolworths. I understand Aldi is a timely activity – but the savings are worth it especially if your meals are planned.
Be aware of serving sizes when you shop anywhere. It may seem cheaper, but not if your paying for a smaller jar or box. Another reason why meal planning – even rough planning – can work in your favour. You will get used to what you normally buy, so when you see a cheaper deal it’s easy to compare.
You may think you don’t have time to go to the next suburb, but sit down and do your costing. Another place I have in my local area (south Brisbane) are factory outlets. We have a golden circle outlet and a Prima outlet as well as bulk meat stores. The Golden Circle Outlet offers products up to 80% cheaper than your standard grocery store.
- Consider Large Outlets Like Costco
Australia also now has Costco. I have not yet tried Costco as it doesn’t fit into my style of Budgeting. I’m also past the Nappy, Formula, Baby food stage. Our weekly groceries are very simple. But if you have a large family I have read about Costco working wonders for the family budget, especially those who are paid monthly.
Here is a Facebook group of over 20,000 people who use Costco and have heaps of tips: Costco Geeks
- Pay Utility Bills Weekly
Pay bills weekly. Do not wait until the bill arrives. This helps with the temptation of spending money you don’t technically have. Often we convince ourselves we will make it up elsewhere, not really knowing how. This creates more financial stress and guilt around financial decision making.
An exercise you can do if you feel the temptation to buy items you don’t need is to open your banking on your smartphone and put the amount you were about to spend onto a utility or otherwise. This could be the daily can of coke you used to buy at the overpriced servo. An average can of coke from these kinds of outlets costs $3.00 on your way to work. Imagine what $15 a week off your utility bill looks like at the end of the Quarter?
This exercise alone will cut a $200 Electricity bill down to $155 When It’s Due.
- Be Aware Of Your Electricity Usage
This is one I personally need to do more of. Especially when it comes to teaching children to turn household items off when they are not in use. It’s also a safety issue as well. Examples: Phone/iPad chargers being left on at the wall, DVD players running, build in robe lights being left on, fans left running.
All of these contribute to your quarterly bills. If you have a dryer you use when it’s raining, consider investing is drying racks which can be mounted for the smaller items such as singlets, underwear, and socks. The smaller you make your dryer loads the less electricity you will use.
Hang things like towels over a larger drying rack outside under a patio, on a balcony or in the garage to dry. The thicker items are more intense on your dryer and are often the easier and less timely items to simply hang out to dry.
- Avoid Spending Money You Have Not Earned Yet
Spending money you have not yet earned is also a toxic cycle anyone should avoid. For example, pawning items and buying them back on payday, dipping into savings that are meant for future bills like Car Registration. This can lead not only to being stuck in a financial crisis but also the impact it has on a person’s mental health can be catastrophic. Especially if you are responsible for dependents.
This can be avoided by weekly putting small amounts on all utilities. It’s easy to think $10 a week on each doesn’t make a difference, is pointless or not necessary because you have the money. Even for those who are not at high risk, it creates much healthier cash flow. When bills arrive quarterly they are usually around 30% Less when putting $10 – $20 a week onto them.
- Consider Selling Items That Don’t Fit Or Are Not Used Anymore
If you are on a very tight budget it is senseless to throw perfectly good items away. You may give items to charity which help others in the same situation as you. This is great. But you can also sell them on you strengthen your budget.
When your children go up in size a large bundle of clothing can easily fetch $10 on the Facebook Marketplace. Sometimes more if the brands are quality. Going back to one of my earlier points, if the clothing was purchased in thrift stores you can almost make your money back if the items are still in good condition.
The great thing about, and you may not realise, is somebody else is also getting cheap clothing and therefore strengthing their budget as well. So you are passing your smart purchases on to someone else.
Go through items not used anymore. Examples are phones, hands-free sets, DVDs, Clothing that no longer fits, Home Decor that has left your home cluttered. Individually these items may not be worth much but collectively you might find you can raise around $100 cash from your smartphone. Selling on the Facebook Marketplace has great potential if you list your items correctly.
- Be Aware Of The Money Coming In And Your Expenses
Knowledge is power and although overwhelming doing your costing is simple. Take the last 3x Months of bills and divide these by 3. These are the bills you HAVE to pay, not the items you want.
Do your first budget without groceries & petrol. You may find it a little scary how much you REALLY have leftover for food and petrol.
For Example:
Incoming $2000 Per Month
Rent & Utilities $2000 Per Month
= $0
This is a bad outcome, but a realistic one for a lot of families who have been living on the stretch. This is a budget that often means constant running from that bottom line, constantly “surviving” and not “living”.
This kind of budget outcome shows a family may have been surviving on the occasional “extra job” that comes your way, Centrelink advances, Supplement payments (Like School Bonus and One Off Income Supplements). This is not a solid income and leaves a person anxious waiting for the next “one-off payment”.
These extra payments are not a regular income and cannot be counted. The reason for this is things like the school bonus and other payments are constantly scrapped by the government. They are also paid in July which means you still have to find the money in January to pay for the school items you will need.
As pointed out earlier, “spending money you haven’t technically earned” and a very dangerous way to survive because you are constantly at risk. These payments are not a guaranteed income and unfortunately we are taught we are “privileged” Australians to have them at all.
- Changing Your Financial Outcome
There are only two ways you can fix this “minus” money problem. You either cut items out of your budget or find a way to earn more money. This is very hard when Electricity, Gas & Rent are all things we rely on in everyday life. When you are unable to afford the basic essentials in life you are in a state of a financial crisis.
Earning more income is the best option but not always accessible. Circumstances don’t always provide the best chances at full-time or higher-paying employment. You may be considering moving to a smaller more affordable home. When looking at making extreme cuts to the budget like moving home, having the landline cut off, ditching mobile phone plans its important to at the very same time plan for the future.
- Plan For The Future and “Just Do It”
In the future you will be tempted to take up a phone plan, get finance for a nicer car or even simple things like signing up for Pay TV, getting a Gym Membership, etc. Beginning the same cycle all over again. Plan now for how you are going to move towards a better income, a better budgeting plan, and a better life.
Once you have planned your future. “Just Do It”. Start the process of getting a better job. Whether this means self-teaching, starting a micro-business or going back to study. Just Do It. The planning means nothing unless you are ready to act. When you are working every day to break the cycle of financial crisis you become more confident when you do face money problems.
If your plan involves starting a small business, paying for study or working somewhere that requires a better car or even something superficial like a better wardrobe. Just Do It. Pick up odd jobs which will pay for your goal. To prevent a financial crisis and ve a better life, for now, it may mean every minute your breathing you are creating your future.
Short-Term Sacrifice for Long-Term Happiness.