It’s one of those life situations we fear the most: complete financial ruin. Those who end up in that dark place oftentimes know that there were things they could have done differently, and steps they could’ve taken to get themselves out of their financial hole. With a few strong habits, it’s possible to avoid complete ruin, so all you need to do is keep a few pieces of sage advice in the back of your mind when spending and budgeting your money. If you’re on a path to financial difficulties and need some help getting yourself back on track, then read on to learn some simple yet overlooked ways to avoid complete financial ruin.
1. Avoid Impulse Buying. Yes, you’ve heard this one before. And yes, it’s difficult to stop. But impulse buying is a must for those with tight finances. That cute shirt may be on sale, but remember to stop and ask yourself these few questions before you buy something frivolous:
- Do you need it?
- Can you afford it?
- Will you use it for more than a year?
- Will it give you actual fulfillment?
The answer to all of these questions should be a resounding “YES!” if you are to go ahead with the purchase. Otherwise, place it back on the shelf and walk away. Even when food shopping, beware impulse buying. Write a list and don’t deviate from it. And remember — do not go grocery shopping on an empty stomach! The good news about impulse purchases is that once you resist the urge, in just a few days or even hours, you’ll have forgotten all about it. That’s what determines its importance and necessity in your life!
2. Create a Budget — and Stick to it. Budgeting is essential for those creeping towards financial disaster because it will lead to strong financial habits. Set a strict budget (but a realistic one!) for each week and stick with it. Follow it like gospel and do your best not to overspend. Once you’re at the end of your strict week, you’ll feel great when you can put the leftover money into savings and actually have a financial cushion for the future!
3. Avoid Prepaid Cards. Prepaid cards are a tempting option for those with questionable spending habits, but they should be avoided at all costs. Most promise the world but are actually packed with hidden fees that end up costing way more than expected. They also can’t be accepted anywhere, they can take a while to top-up, there’s no mobile app, and the security is weaker than a standard card. Even with bad or non-existent credit, there are still plenty of alternative banks that will allow you to open a regular checking account with no fees and build your credit. Prepaid cards may look the most promising for a bad financial state, but the long-term effects could be detrimental.
4. Never Co-sign or Guarantee a Loan for Someone. This is very dangerous territory that can make you financially responsible for someone else’s purchases if they can no longer make the payments, or even if they miss one. It’s something you should never do in a precarious financial state, even for family as it could drive you even deeper into debt and ruin. We understand that for many it’s tough to say no, but you need to think through the worst-case scenario for yourself first. Are you willing to risk your financial security for someone else?
5. Make Use of Online Banking. Online banking allows you keep track of your monetary comings and goings so that you always know where your money is no matter where you are. You can even transfer funds to your savings account if you want to stay on top of things. Mobile banking is so important if you want to constantly stay up-to-date and on top of your financial situation.
To Conclude. We hope that this advice about how to avoid financial ruin has proved useful and has shown you exactly how you can make the right changes in your life in order to prevent disastrous financial situation. Little habits can really add up, like saying no to prepaid cards (and thus tons of unwanted fees!) and never guaranteeing a loan for someone else can be huge steps towards financial bliss, even when both are tempting options. Otherwise, simple budgeting and keeping track of your finances via online baking have a lot more to offer than you may have initial believed. Happy saving!
