A Good Financial Preparedness Plan Will Include:
Food Storage, Gardening, and Self-Reliance for Busy Moms
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.
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 $1,000 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.
Rome was not built in one day, so don’t expect $1,000 to just pop up in your starter emergency fund overnight – As one wise man once said, “An overnight success is ten years in the making.”
It takes work, focus, and commitment to reach this goal even if you’re neck deep in debt. However, setting aside $1,000 for rainy days is easier than most of us think and it usually implies just tweaking a few things in our lives, like:
Look, I’m not asking you to turn into a cheapskate and to spend the rest of your life penny pinching and cutting corners. I’m asking you to start being financially prepared and start working on getting rid of debt starting TODAY.
There’s no use in turning your life upside down and becoming a different person than you are. That would lead only to mounting frustration and defeat n the long run. But I believe you can too achieve financial freedom one small step at a time. And you can do it effortlessly thanks to a phenomenon called “the compound effect.”
So before you start, get some mental preparation. An absolutely must read is Darren Hardy’s “The Compound Effect” to learn about how small, consistent changes can lead to incremental gains in time. As one happy reader put it, big changes happen “slowly, slowly, slowly, . . . SUDDENLY!” Don’t miss this amazing book.
During this challenge, you are supposed to spend absolutely no money on non-essential items over one week. The original challenge was to not spend any money at all over one week, but some people have watered it down and still spent money on essential groceries and gas/ transportation. Both versions of the challenge yield amazing results.
The savings are exceptional. Depending on your weekly spending you can save between $70 and $300 over a month or thousands of dollars a year if you do the challenge every month.
But the greatest part about this challenge is that it makes you more mindful about where your money goes. It is best to keep a journal of the week and to write down the items that tempted you the most during the challenge. See if those items are still important for you after the challenge is over and buy or forget about them accordingly. Keeping track of your budget in the meantime is also a great way to squeeze all the juice out of this challenge.
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.
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!
Related Read: Counting Cupcakes & Financial Preparedness
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!
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Resources: Financial Preparedness Quiz
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