Finance and money forms a larger part of our lives. Starting a business, running a business, saving money, buying a property, saving for that car, sending your kids to school, borrowing to start a venture or just raising capital for anything important, all forms part of our existence. Stability in finance is one crucial area that most of us shy away from. Unfortunately, in some of our societies, mediocrity and “false riches” are celebrated instead of reality.
I have seen most people around town, cruising the best four wheels on loan, some celebrating the best and expensive birth days and living a life of affluence without any investment. I have seen those who go on weekly and monthly buying spree of the latest fashion, expensive jewelries just to show how successful they are. And I have also seen that most people are financial unstable but they do not know it. They only realize it very lately after all the excitements are gone.
The truth is that most people in our society have one thing in common. They all live with money struggles. If you have money struggles but do not know or you are aware already but do not know how to plot your way out, this piece is for you. You will understand signs of money struggles and how to get out of it. In all I have written, I would want you to be very honest with yourself as you can never lie to yourself about your struggles.
The following are 5 clear signs you are financially unstable and also how to deal with them. I will challenge you to look inward and decide today to deal with your struggles by taking the bull by the horn.
1. You Do Not Have Emergency Fund
In simple term, an emergency fund is a fund that is kept as cash account to be able to foot bills on emergency such as unexpected financial disaster. An ideal emergency fund should be a fund that can cover a living expenses of your home for between three to six months. But if you do not have any or have little of this, then you are living at the mercy of disaster and anything can trigger you into financial mess and powerful mess. It means you can extinguish into financial death at any time. Unfortunately, most of us are living from pay cheque to pay cheque
It is important that you start an emergency fund account as it holds guarantee for you in terms of investment. In essence, savings accounts are good for emergency funds, while stocks are bad. Your emergency fund is a financial disaster recovery fund. Therefore a loss due to bad financial decisions or lost of payment of your salary if you work for few weeks will see you falling back to your emergency fund for recovery. If you do not have an emergency fund, you will need to start one today. All you need to do is to go to your bank and open a savings account and start saving diligently and consistently on weekly or monthly basis without withdrawing from that account at all. You will be glad you did when the need arises.
How to build your emergency fund
There are no one best ways to build your emergency fund. But fundamentally, my advice is that you should start today with little cash. You can build it up a little at a time. The most important thing is to get started and to remain consistent so that over time you can reach your emergency fund goal.
These are some tips on how to build your emergency fund with success:
- Segment it. The easiest way to succeed in building your emergency fund is through segmentation or breaking down and going little by little. Decide how much you want to start with as well as your goal and then be consistent in saving such amount into your account, You will be glad once you reach your goal.
- Convert Wasted Monies. We all have leaks in our finances. Almost all households have wastes that are up to about 10%. You can identify these leaks and convert them to your emergency fund.
- Automate Your Funding. This undoubtedly is one of the best ways to save to your emergency fund without your remembering. Automation will help in easing this system. All you have to do is get a standing order with your bank to credit your emergency fund instantly from your main account – salary or other account- every month,
- Celebrate Funding Achievement. It is worth celebrating once you reach a particular goal. Take a celebration with your household once you reach a short term target of your funding, this way, they will all understand your goal and why you are involved in this saving system.
2. You don’t sleep at night due to financial worries
We all will surely experience various degrees of stress in terms of our finances. But it does not have to be all the time. If you are losing sleep over money worries, how to foot the next bill or a huge debt steering you on your face or you worry about how to buy those luxuries of life, watch it as it is a bad sign of financial instability. Most of the time, this can result in stress and sickness. Losing sleep will affect you and your ability to even smartly look for the money in your life, so stop.
What you need to do?
1. Worry Less: Worry will not solve your problems. All you have to do is to look within and see where there are leakages and close them in your financial spending. Draw a budget for each month and follow it to the later.
2. Be Positive: Just know that things will improve. Be positive and avoid mistakes that results from negative emotions as they could be damaging to your health and financial future
3. You are broke each month after paying your bills
You need to live frugally. Some of us eat above what they earn while others do not have enough after paying the bills, The fact that you are able to pay your bills at the end of each month does not also mean you are financially stable if you do not have extra money left.
You need to close up and check your spending as well as deal with this situation decisively. You need to make sure that you have extra for savings each month after paying your bills each month, therefore, you must have a saving culture. Not having a saving culture is financially suicidal.
4. You Avoid Discussion about Money Matters with Others – Including Your Spouse
Do you live an avoidance lifestyle when it comes to discussing money matters? If you avoid money discussions with people in the public, or at home even with your spouse, then there is a clear danger you are unstable financially and you need to check it. Money matter is one of the fundamentals you need to discuss with people and say it plainly without hiding anything.
It has been shown and proven that many people with money troubles and challenges avoid discussing money matters with other, especially finance. This is one reason money is one of the biggest issues of disagreement in marriages. Even if you avoid discussing money matters with your spouse to allow peace to reign in your home, you will find out that in the end, it will result in a big family crisis or differences and this is dangerous for your home.
5. You Have More of those Stuffs than Necessary, especially above your income
Most people’s financial instability stems from the fact that they are among those who buy things at the spur of the moment without financial thought for the future. If you are having those stuffs in your home, or you indulge in a lifestyle that is not necessary but also above your income, then you need to check it. I am not against buying of good clothes, that nice watch, cars, jewelries etc. But if you are financially savvy and frugal and ready to save for the future, then you need to apply what Author and teacher Brian Tracy calls Delayed Gratification. It is better to save than to go on buying those stuffs.
Most people are riding on nice cars on loan even when they do not need such cars. They do it to show off and let the society know they have arrived. This is a sign of financial instability and you will certainly pay for it in the future.
Avoid that spending in that restaurant, that car, that jewelry that you do not need or is higher than your income status. This is pure financial indiscipline and so you can avoid it . Not heeding to this will result in other problems that we have also discussed above.
I know you will be financially wise. Let me read from you