If you want to know how you are doing financially, answer how you would pay for each of the following expenses today.
· Owed taxes
· Speeding ticket
· Medical deductible
· $5,000 dental emergency
· Emergency pet surgery
· Travel to a wedding
· New transmission for your car
· Emergency plumbing at your home
· Hosting Friend/Family Baby Shower
· Annual memberships
· Your wedding
· New kitchen appliance to replace a broken one
· New HVAC
· Holiday gifts
· Surprise guests visiting
· Kitchen remodel
· Injured and can’t work
· Laid off from work
If most of your answers are to use a credit card, that indicates you do not have enough money set aside for life’s events. If your answer is tapping into your retirement funds, and you are not retired, this indicates a need for a financial plan.
I prefer using the term life’s events vs. emergencies because, let’s be honest, most things that happen are a part of life. In my experience, I continue to find most people don’t have enough money saved. I also hear a lot of advice that suggests overlooking the need to save. Sound financial advice and experience teaches that your savings and investments are different things with different jobs. Your savings cover life’s events and your investments build wealth. Debt, on the other hand, if not used correctly, derails financial stability. In particular, high-interest debt is a leak in your ship.
So, how did you do? Do you see the need to focus more on your finances? If you do not, start doing so today. Remember, with finances, time is your biggest asset.
Lana, Financial Coach
