Financial stressors are one of the most debilitating problems we can experience and can be just as traumatic to those around us. The constant worry associated with money shortages can wreak havoc on our lives, causing enormous strain, unbearable anxiety and even result in serious bouts of depression. All of the negative characteristics associated with financial irresponsibility not only affect us, but they affect our family, our friends, our careers and our hobbies. Before making any decisions about taking on new debt, we must be aware of our current obligations and make conscious efforts to avoid the plague of insurmountable financial liability.
Responsible money management can be summed-up in one statement: we cannot even attempt to live beyond our means. Before taking on any new expenses, we should analyze our current expenses and accurately calculate our debt to income ratio. This, coupled with budgetary planning, can provide us with a clear picture of our financial situation. This budgetary planning, though, must also include consideration of unexpected occurrences, such the need for a water heater replacement or expensive medical testing. Through the completion of these simple steps, we can make an informed and intelligent decision about whether we should take on a new loan or expense.
We do not wish to become people whose money manages us, rather then us managing our money. As such, appropriate strategies for saving money must also be implemented. In this area, we do not have to suffer as a result of saving. Even though many of us plan our retirement through large deposits in risky investments, this is not necessary, nor is it practical for building an emergency savings account. Rather, we can make a small deposit weekly or monthly in higher yield accounts. Certificates of Deposit are safe investments, which can be purchased in a variety of denominations, and are especially convenient for being accessible in the case of a financial emergency.
These tactics may appear overwhelming, but we must keep in mind that building a secure financial plan is a process rather than an event. It is important to prepare a thorough and detailed plan, with family input, in order to avoid being overwhelmed by the initiation of our money management strategies. Delegating responsibility to others and relying on the support of our family are also integral components of this arrangement.
In taking these simple steps, we can ensure that we are prepared for major financial events in our lives. This will help us to avoid the pitfalls of irresponsible spending and flagrant ignorance of our money situation. In the end, we will certainly be thankful for the effort we put forth, as we can lead happier and healthier lives without the stressors associated with living under a mountain of debt.