Day 20 National Preparedness Month Challenge – Financial Preparedness
Financial Preparedness – the state of having control of your finances.
Financial Freedom – gaining peace of mind; no more sleepless nights!
We are talking about money today. YOUR MONEY. Do you have control of it? Or does it just do what it wants, stealthily escaping from your pockets and accounts, causing you to worry late at night.
That’s where my family was in 2008 when the market went south. We were already living pretty much paycheck to paycheck and I thought we had control of it. I was even reading some “get control of your debt” books and making small steps in the financial preparedness direction. But I had been living with that uneasy feeling for awhile – you know the one – that my financial house of cards would come crashing down and we would get caught.
And get caught we did. Our additional income stream dried up, the business we had sold on contract came back to us and I had ZERO money in savings! All of a sudden, the “get control of your debt” books were making a lot of sense and we were shocked into action.
A search on Amazon for Financial Preparedness gave me several choices and many voices, almost too many to choose from. I went to the library and checked out all the books I could find. You should pick the program that seems right to you and find the adviser with the “voice” that speaks to you. We decided on Financial Peace University by Dave Ramsey.
No matter which one you choose your program should have the following elements.
A good financial preparedness plan will include:
1. Working with a Simple Monthly Budget (download) – and being nerdy about it. You can only get control of your money once you know where it’s going. We work with a zero budget – every dollar has a name. Download a spreadsheet to get started.
2. Stop using your credit cards and going further into debt. This may seem hard but it’s the only way to get control. We don’t make any purchases now unless we budget and have the actual cash.
3. Put aside $1000 as an emergency fund. Consider it a buffer against life’s storms. This one piece was magic for me!
4. Make a plan to start paying down your debt. List all of your debts, smallest to largest or highest interest rate to smallest interest rate. It doesn’t matter, just make a plan and begin.
5. Live within your means and look for ways to save money – we all have expenses that can be cut back or eliminated.
Why should you even bother being financially prepared?
After all, the world gets along just fine charging whatever it wants, don’t you deserve to have it too? My reasons for financial preparedness are pretty simple and they keep me sane.
- // It is worth it not to worry about money. If we lose a job, we can still survive.
- // Being self-sufficient is important to me. I do not want to have to rely on the government if we are out of work. Many American’s have no savings and 43.1 percent of Americans do not have enough money saved to even subsist at the poverty level for three months if their income was suddenly cut off. For a large number of Americans, savings is minuscule or non-existent and they are one paycheck or one minor setback from financial disaster.
- // Just like Long Term Food Storage, financial preparedness is a buffer against life’s storms.
- // Being financially prepared will cover more disasters than any other preparation you can do – unemployment, car repairs, sickness, hospital, smaller check – all those little things that cause our heart rates to jump when they happen.
After 3 years and with a bunch of hard work, sacrifice and determination, we are now debt free and financially prepared. You can be too!
Today’s Challenge: Get your Financial Preparedness muscles flexing
GOOD: Download the Simple Monthly Budget and fill it out. Make a personal pledge to follow your budget “to the letter” next month.
BETTER: Go online and look at some websites. Get more knowledge about how to get out of debt and have financial freedom. Dave Ramsey, RichDad and the Personal Finance Class at BYU are great places to start.
BEST: List all your debt, EVERY BIT OF IT, from smallest to largest and use one of these financial calculators to make a plan and GET RID OF IT!
Resources: Financial Preparedness Quiz