Money problems is so prevalent in the finances of most American consumers that it is already being considered as the norm. But that should be corrected as early as possible because there is nothing normal with being in credit card debt. There is nothing normal with having to take out payday loans just to make ends meet.
But they are happening because financial information are not being processed correctly. Even USAToday.com shares that one of the biggest problems consumers have today is making sure they are able to make ends meet. This could be because they charged too much on a credit card from a sale event or just wanting to have that latest car model in their garage.
The country’s economy revolves around the purchases of people meaning it is consumer driven and the more you buy, the better the economy is. This could partly to blame for the financial approach consumers have when it comes to buying things off the shelves. But at the end of the day, that decision still falls on their lap.
Financial education can help keep money problems away but that is not the end of it. You might know that it is not good for your but you still go ahead with it. There are times that you do it because you feel you want it or entitled to it but at the end of the month, you deal with bills you have no way of paying. You dig yourself in a hole that you have a hard time getting out of.
Keeping your finances intact
As the year is about to close and a new one starts in a few months, there are a few things you might want to look at to help you stay away from financial challenges. There are some unavoidable ones but you need to attend to those that you can control. Here are a few of them to check up on before the year ends.
- Review your financial goals for the year. You should have financial goals in life because without it, you run the risk of trying to start a marathon with no end goal in mind. You wander off not knowing where you are headed and why you are even doing it in the first place. Before the year ends, you might want to check up on your financial goals. You can look at both your long-term and short term goals. Your long term targets might not materialize in a span of one year but you need to at least have made some progress. If you charted out a short-term goal for the year, you need to assess where you are and if you are on track in making it happen.
- Do you have debts you need to address immediately? A lot of money problems start because you end up in debt. You find your financial obligations in delinquent status or worse, in default. Nerdwallet.com explains that one of the biggest payments consumers have to make is for their mortgage loan which on an average is at $155,000. Although this really takes some time to pay off, there might be other obligations that are running behind like a card payment. You need to check and make sure that you are current with all your payments or you run the risk of not only inflated payments but a low credit score.
- Check your credit card status for holiday use. As the holiday approaches, you will find the need to purchase gifts and other things for people in your life. If you plan on using your credit card, you need to make sure it is in perfect standing. Just like how you would prepare for a long land trip, you check you car and see if it is in a condition to handle the journey. You need to check your card and see if you need to ask for an Increase in your credit limit or simply pay down balance to get some purchases in. As you use your card, be a responsible consumer and pay if off as soon as you get the statement.
- Do you have investments you need to check up on? You need to be active with your investments and make sure that they are hard at work for your future need. There are risks when investing but you need to manage them accordingly. One is knowing how they are performing to see if they are on track. If not then talk to your fund manager to see if you need to change something or wait it out for a few more years.
- Be mindful of scam investments. The holidays can bring a lot of scrupulous entities looking for a victim and try to not be one of them. The way to do it is if the terms seems too good to be true and you feel rushed into the decisions, it might not be a good idea. Scam artists are very good in convincing you of high returns at such a short time and the need to take advantage of the deal now or you lose the chance forever. They would try a little harder to con their way into your money because of the holiday season.
- Watch out for the lure of holiday spending. One of the biggest money problems during the season is holiday spending and losing control. You might have a budget and even a list to start with but the mall sale and the people you just met could add up and and inflate your expenses to more than what you could afford. Be on guard and stick to your list to help you spend the holidays away from unmanageable debt. One thing you can do is if you get in debt, pay it off and learn from it. Try to save as early as possible so when gift buying time comes around again next year, you are financially prepared.
- Prepare your financial goals for the coming year. It is never too early to financially prepare for the coming new year. You can look at what goals you set out to accomplish this year and copy that or look at your long term goals and see how you can break down your steps to accomplish something significant the coming year.
Important areas you need to focus on
As you try and stay away from financial problems before the year ends, here are some of important areas you might want to put extra focus on.
- Reserve fund level. This constitutes your emergency fund and your rainy day fund to help you address any unforeseen emergencies that can put you off financially. You need to check your reserve fund level before the year ends to see if it is still up to a level where it can cover emergency expenses. If not, you might want to get it back up again so you end and start the year right.
- Retirement fund. Time.com shares taht typical working class only has about $63,000 in retirement fund. Although an improvement from $43,000 in 2012, this is still a long way to go from a comfortable million dollars which is the acceptable retirement amount needed to survive. Take a look at your retirement funds and see how you can fast track your goals and be able to have the luxury of retiring early.
- Secured loan status. These are usually your house, car and other properties that were used as collateral for a loan. You need to take extra careful in keeping away from payment problems with these ones because although they come with the lowest rates, they have the biggest risk. When you default with these loans, your lenders can exercise the lien they have on your property and you can find yourself kicked out of your house or your car being driven away.
There are a lot of money problems that you face on a daily basis and the idea is managing them and addressing them even before they blow out of proportion. And as they year slowly comes to an end and another one starts, it is a good idea to keep on a straight path and avoid financial challenges in life.