How to Prepare For Financial Uncertainty
This past month I have been thinking a lot about how we can eliminate financial uncertainty from our lives.
Most of this uncertainty can be eliminated by simply making better decisions.
Financial decisions – just like any other decisions we have to make in life – are either going to get us closer to our goals or further away.
Sounds simple, right?
You Only have to do a very few things right in your life so long as you don’t do too many things wrong. – Warren Buffett
Over the years, as I’ve worked with hundreds of people and their money, I have seen how much of an impact a few bad financial decisions can have.
Auto loans are a perfect example of this.
When we overpay for a car, this decision affects every aspect of our money.
It puts extra stress on our monthly budget, and when there is not enough to cover our other expense, we resort to credit cards.
When the credit cards are maxed out, we then turn to loans against our 401(k) to help us get by.
So what started out as a seemingly inconsequential car purchase, has now maxed out our credit cards and taken a big chunk out of our 401(k) retirement account.
That $30,000 to $40,000 car purchase has likely just cost us hundreds of thousands of dollars in credit card interest and lost growth in our retirement accounts.
I have seen this exact scenario play out many times.
So what do we do when we are in this type of situation and something unexpected arises, like: a medical issue, loss of job, reduction in income, recession, etc.?
If we are not prepared, things can go bad very quickly – as we saw during the Great Recession of 2008.
The good news is that if we know the proper steps to take, this can be avoided.
My Blog post for this week talks about Preparing for Financial Uncertainty – and more specifically, preparing for the next recession.
In this blog post we detail 5 steps individuals should take when preparing their finances for these unknowns.
Here is the blog post:
We have seen 6-8 years of strong economic growth, which means a recession is likely just around the corner.
That doesn’t mean it will be catastrophic, but it will have an impact – especially for those who are unprepared.
I hope this post is a valuable reference for you as you prepare for the financial unknows in life.
P.S. Next week we will be back on track with our weekly Finance Friday, so stay tuned!