These days, credit counsellors and bankruptcy trustees are in high demand, as the tough economy and job market has meant that many individuals and families have found themselves tightening their belts as companies cut back their workforces and people lose their jobs. Families used to living off two incomes have had to adjust to their budget being scaled back considerably, and some have watched their life savings and their credit disappear.
Having to learn to resist buying whatever your impulses tell you to buy can be a tough adjustment to make, but the illusion of unlimited spending is a bubble that needs to be burst. Even if you earn a lot of money, not tracking your income against your expenses is a recipe for financial disaster. Success is often a matter of making a plan and seeing it through, but it’s not easy to set a goal and achieve it, especially if the challenge involved requires changing our long-held habits.
Even if you don’t have a family, your finances are not a sprint, but a lifelong marathon. It’s easy for someone in their teens, twenties, and even thirties to just think about what their needs are in the immediate future, and not consider what lies ahead down the road. It’s valuable for every young person starting out on their own to receive some instruction in personal financial management, so they can learn that you need to save for a house and your retirement, and that the key to successfully doing so is starting early. Living according to a budget that is calculated to put money aside for these goals, as opposed to living according to one’s whims, is essential to actually achieving these major life goals.
If you get in the habit of using credit cards or even debit cards to buy things, you will have the option of buying an item immediately and letting the future version of yourself worry about it. By the time the consequences of indulgence catch up with you, it could be too late.
The key to accumulating a nest egg that will allow you to enjoy a comfortable retirement is letting the power of compound interest work for you, instead of against you, as it does when you accrue debt. To make this happen, you need to get in the habit of setting aside a portion of your income for savings. The rule for saving is to pay yourself first. When you get paid, immediately put a portion into savings. When you follow a household budget, you set aside a portion for savings, so that when unexpected expenses crop up, like car repairs, you’ll have money set aside for it.
Budgeting is the cornerstone of financial responsibility. Those who have turned to a bankruptcy trustee to relieve their debt problems won’t have the option of dipping into credit to fudge their budget. A budget is not a prison sentence. When you feel like you must have something that isn’t actually a need, you are a prisoner to your impulses. A fun life doesn’t have to cost an arm and a leg. Hopefully, you’ll live a long life. If you can learn to follow a budget now, your later years will find you reaping rewards instead of paying for your past.
Kevin Thatcher and Associates help individuals and families get a fresh financial start, providing friendly and customized bankruptcy trustee Toronto services.