Consumer debt in the US is getting out of hand. According to a recent poll, over 60% of the population doesn’t have enough money to cover a $1,000 emergency. With the wages not increasing as fast as the cost of living is, there’s been a steady increase in people relying on credit to cover their expenses.
The main problem here is a lack of effective financial goals, stemming from a dearth of financial education and proper financial planning. This means that most people are just one small mistake away from a financial disaster.
Here are some simple steps that will help you set good short-term goals so you can have a secure financial future:
Establish A Budget
The main reason for out of control spending is people not keeping track of where their money is going.
The first step when it comes to financial planning is establishing a budget. Write down the amount of money you earn and your monthly expenses. Allocate funds for each necessity and set aside some money for a rainy day.
Not only will this help you keep track of your expenses, but it will also ensure you have some extra cash in the bank for an emergency.
Rein in Your Spending Habits
Most people have little to no control over where their money goes, and often give in to temptations.
This causes them to spend more than their means, thereby increasing their debt. So restrict your spending habits by reducing your budget for eating out and other frivolous activities. While this can be tough, in the long run, it’ll make your life much easier!
Consult A Professional
One of the major downsides of public education is the lack of a financial planning component. So by the time you’re in your twenties, you find yourself in a pile of debt due to credit, student loans, etc.
In that case, what you need to do is to consult a professional. While hiring a financial planner might seem like something the ultra-rich do, it can be beneficial to low-income individuals and families too.
Not only will they help you set up a budget, but they can also help you find a way to start paying off your debts.
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