When you are properly equipped with financial tools, it makes a lot of sense that you are able to reach your monetary goals in life. It can be as big as buying a house with a mortgage loan or a car with an auto loan or as simple as staying away from a sale event in the mall because you do not want to make unnecessary expenses in your budget.
Having the right tools for the job at hand is critical in realizing your objective and optimizing the tools themselves. Imagine a carpenter that only brought hammer and nails but later finds out that they need to cut some wood before putting them up. Or it can be a car mechanic that needed to change tires but forgot to bring a lifting jack.
The same can be said about financial tools because having to face a financial situation but being ill-equipped can lead to money disasters. If you had to pay for a meal but you only had your checkbook, that is a major inconvenience on both your part and that of the establishment. And that is just a small thing because some might even accept the check as payment.
If you suddenly find yourself checking in a hotel after you have planned for a well-deserved vacation for a year but forgo your credit cards, you might have a hard time making a security deposit with the establishment. There are other ways to do it and USAToday.com even shares ways to have it waived, the most efficient would be to use your credit card where they just put a hold on the amount and release it when you check out.
Financial essentials you need to have with you
Financial tools can help you keep your finances intact especially for your everyday needs. You might be able to prepare for consumer loans and vacations but your everyday finances is a different things. Here are some of the tools that you would need on a regular basis to make sure you are prepared to meet any eventualities.
- Cash for emergencies. It is a credit-driven world but you still need to bring with you cash to pay for various items. Take for example some small shops where you can find one-of-a-kind items that you will never see elsewhere. Because of the nature of their small and probably start-up business they might not be able to accept card payments. If you are also getting small items in a convenience store like a drink, gum or even newspaper, it is best to pay for them with cash.
- Credit cards. One of the financial tools that you need to have with you is your credit card for a number of reasons. There are instances when you need to re-think paying with credit card but when used correctly, it can help you tremendously. For one, your credit card is your best tool in increasing your credit score. That is of course if you pay your bills on time every time. The convenience that comes with the card is also a great way to help you purchase items without the need to carry large amounts of cash with you.
- Mobile phone. Pewinternet.org shares that about 64% of American adults carries their own smartphone. This may be a a by-product of technology but a smartphone is one of the many financial tools that you can carry with you at all times. It can help you with multiple financial chores above the main functions of the phone. It can allow you to make or schedule payments with just a few taps on your phone. It can also help you take a look at your monthly budget and help you see if you can still afford that new dress. It can also help you monitor your investments and see how they are performing.
- Financial common sense. This is tricky because most people would be quick to associate this with people being very savvy with their finances. But this is one of your financial tools that you can develop over time. It can come from learning from past experiences or even having the common sense to not spend what you do not have. Sadly, most people who abuse their credit cards seems to fall into this dark predicament. They fail to realize that with some of their purchases, they are paying with money that that they do not own for an amount that they cannot pay in full. This starts a vicious cycle that continuously puts you in debt.
Surviving an emergency
When you talks about your finances and having the right tools for the job, it is almost always related to facing financial emergencies. There are a lot of unexpected situations that creeps up in life and having the appropriate financial tools to face them makes it a little bit easier to manage. Here are some of the things that you can use to make sure you can get through financial emergencies.
- Reserve funds. This would mean the obvious emergency fund and the sometimes forgotten rainy day fund. These two form your reserve funds and can help you through emergencies but they differ in use. Your rainy day fund is meant to cover small unexpected financial situations like a sudden car repair or fixing a small leak under the sink. The emergency fund however is for the big leagues like losing your job or needing some medical surgery but both are great financial tools to have when emergency strikes. Workopolis.com shares that it usually takes about four months to get a new job so target to have at least that much of funds to cover your expenses.
- Frugal living. When faced with tough financial situations, it often easier to cut costs rather than increase your income because that is something you can achieve right this instant. Frugal living means living below your means and if you have some unexpected financial situations, cutting costs in your budget can help you get through them. It can be cutting your budget for entertainment and staying at home and spending with the children. It can also be that gym membership that you haven’t been using in a few months but have been paying for the last few months. Look at what you can live without and strike them out of the budget.
- Positive mindset. Another one of the financial tools you can have during emergencies is taking on a positive mindset. Instead of worrying too much about what will happen, why not be proactive in fixing the problem? If you find out that you will be laid off at the end of the month, why not use the time to look for a new job instead of worrying yourself to death? If your health is failing, go out in the sun and exercise and keep fit and active instead of worrying too much.
- Learn from mistakes. This is an important factor when dealing with emergencies – learn from it. Apart from trying to get through them, keep in mind the lessons that it brings. This can greatly help you avoid potential financial problems along the way.
Financial tools are a great way to help you get through your everyday finances and household budget. They can also be of great help when you find yourself in the midst of a financial emergency. Be prepared and continuously learn to be able to adjust to ever growing financial needs.