How to Avoid Financial Trauma

How Can You Avoid Financial Trauma? (Image Source: Shutterstock)

Self Examination

The first step in avoiding financial trauma is to step outside of yourself and take a cold, hard, objective look at your personal financial behavior. Does the very thought of your finances cause you to break out in a sweat? Do you dread the 20th of the month when it’s time to pay your bills? Are the majority of your household arguments to do with money matters?

Avoidance Of The Problem Will Only Set You On The Fast Track To Financial Trauma (Image Source: Shutterstock)

Make A Plan

Once you have acknowledged that you have a problem, you need to undertake some financial planning to get your finances back on track. Start by identifying just where you are right now. Create a spreadsheet on which you list all of your fixed and variable expenses. Be sure to include your average food shopping bill as well as what you spend on takeout food and entertainment.

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Money Management

You are now in a position to manage your money by creating a budget. You will never get on top of your finances by winging it. You need a budget in order to control the flow of your finances. Of course, a budget is only as good as your resolve to stick to it. So, go into this process determined to follow through with financial discipline.

You Need A Budget In Order To Control The Flow Of Your Finances (Image Source: Shutterstock)
  1. Collect your paperwork, including bank statements, bills and 1099s.
  2. Calculate your income.
  3. List your monthly expenses.
  4. Work out your fixed and variable expenses, including savings and debt repayment as fixed expenses.
  5. Total up your monthly expenses and income.
  6. Make adjustments to your expenses as needed.

Prioritize Savings

Building your savings is the key to avoiding financial trauma. As well as providing you with a monetary reserve for emergency situations. Your savings will provide a source of wealth-building that is working 24/7. The power of compounding interest will allow your savings to build upon itself.

Reduce Your Food Shopping Bill

Knowing that you should start saving and actually being able to do so are two different things. The first place you should look at to find the money to put aside is your take-out and grocery shopping bill. Try eating out a little bit less and try planning a weekly menu for yourself. You can shave off even more money by planning your meals around reduced-price foodstuffs and in-season produce.

Try Planning A Week Menu To Control Extra Expenses (Image Source: Shutterstock)

Cut Out Unessential Luxuries?

You do not need to pay a premium price for your entertainment items. There is a whole world of competition out there that provides you with cheaper options. For example, if you are still paying for cable TV, consider ditching it in favor of the host of free and low-cost web-based cable TV alternatives. And, sure, you need a phone, but that doesn’t mean that you have to pay through the roof for the latest iPhone that provides you with features that you’ll probably never use. There are far cheaper options out there — seek them out.

Research Your Purchases

Discipline yourself to slow down, step back, and make purchasing decisions on the basis of objective facts and your financial goals rather than subjective emotion. With the internet at your fingertips, you have the ability to contrast, compare, and investigate to get the very best deal. Be sure to thoroughly check product reviews.

You Have The Ability To Contrast, Compare, And Investigate Best Deals (Image Source: Shutterstock)

Avoid Financial Stress

Avoiding financial trauma really comes down to one thing; financial discipline. You are in control of the money that flows through your fingertips each month, even if you don’t feel like you are. You always have options that allow you to steadily get on top of your financial situation. If you have the resolve to do it, you can. It may require cutbacks and adjustments to the lifestyle that you’re used to overcome your financial problems — but being able to sleep soundly at night while paving the road to a successful financial future will make it all worth it!

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