Financial Planning in a Bad Economy – Part 1 Budgeting and Credit Cards
This post is a two part series on financial planning and wise savings ideas in a down or troubled financial market.
In an economic market filled with volatility and uncertainty, knowing how to financially plan and where to invest money can be a mystery even to experts. With people losing jobs left and right, financial stability is hard to find for anyone. Therefore, everyone should know how to manage and know where to invest his or her money. Money can be saved in a bank or invested in the stock market even in a down market as this.
Concisely Budgeting Saves Money
The most basic key to successful financial planning is literally planning and writing out a budget. If you can physically see where your money is going and how much you spend on a certain items or luxury unnecessary, you are more likely to save money. If you track your spending habits without changing anything for the next week, you would be surprised in where you see your money go. People do not plan to fail; they fail to plan. Planning out exactly how you will spend your money, and adhering to your plan will result in saved money and extra cash for you. A big player in what got the economy in a downturn is excessive spending and buying. If you know that you cannot afford something, simply restrain yourself, and do not buy it.
Credit Card Pitfalls
Too often people forget that they will have to pay that credit card bill back. When you use a credit card, it is easy to think that you are not really spending your money because you are not physically using cash, but rather a plastic card. However, this money will absolutely have to be paid back at one point in time, and if you do not have the money, you will feel the consequences: bill collectors and a ruined credit score.
Do not waste your money on a new couch or car when you know that you are in risk of losing your job. You will need all the extra money you can save. If you know that you have some sort of credit card debt, as hard as it may be, try and get it paid off as soon as possible. Just making the minimum payment on credit cards is a trick by the credit card company. You will never pull yourself out of debt if you just pay the minimum payment because the interest will catch up faster than you can pay.
People tend to neglect the fact that interest rates do add up quickly if not paid off in time. Additionally, you need to carefully review the terms of your credit card. Too often, credit card interest rates will go up after a certain amount of time, thus, increasing the amount you will have to pay. Sadly, this happens to many unfortunate, poor people, but this is just the way the credit industry works.
In summary, simply creating a financial budget allows one to think carefully about where money goes and if your hard earned cash is being wasted or not. In addition to financial planning through budgeting , also relates to avoiding credit card pitfalls. It is easy to get caught up in credit card debt because of the ease of use, the delay of realization, and the killer credit card interest rates.
For more financial planning ideas in a down economy check out Shopping Banks and Safe Stocks and Dividends.
Tags: bill collectors, consequences, credit card debt, credit score, economic market, extra cash, extra money, financial planning, financial stability, losing your job, spending habits, stock market, volatility, where to invest money