New Year, New Plan: Responsibility
Are you starting to think about New Year’s Resolutions? Is getting your financial situation in order on the list? If so, before you start planning for those things, you might want to take a step back and think about your responsibility. Now before you freak out about the word responsibility, let’s break it down. Think about it as response-ability, or your ability to respond. What is your ability to respond to emergencies? Are you able to respond positively to new or challenging situations? Here are 4 strategies that can get you started for preparing for your response-ability:
Seriously, this is the number one reason why people cannot reach their financial potential. Stop waiting around until it’s the right time, or once you get that raise, or once your tax returns comes in. The longer you wait, the harder it will be to get ahead. Start small if needed, but get into action in some way.
Protect Your Most Valuable Asset:
You are your most valuable asset. Your ability to earn income needs to be something that’s protected. Your family’s ability to respond to a disability or a premature death can’t go unaddressed. What happens if you can’t work? How will your family continue to not only pay the bills of today, but save for the future if the breadwinner of the family dies? Since our ability to earn an income contributes to building a financially secure future, shouldn’t it be insured for its full replacement value? Don’t let you and your family go unprotected, get this handled.
Pay Off Debt:
Getting debt under control is a high priority to achieve your potential. With this being the holiday season, did you know that 25% of parents have dipped into their emergency savings or 401(k) retirement plan or taken out a payday loan in order to cover holiday expenses? This is an example a situation where you are not able to respond well to upcoming circumstances. There are many ways to approach paying off debt. You could pay off your high interest credit card first, while paying the minimum on other cards. Or, pay off the smallest balance first so you feel the accomplishment of getting one debt eliminated. Or, consolidate credit card debt to get monthly payments down to a manageable level. Any of these will work, but only if you decide to alter the behavior that got you into debt in the first place.
Have Emergency Saving:
Saving 6 months worth of living expenses gets you in a better position to handle unforeseen events. What happens if you lose your job unexpectedly? How quickly will you have access to money? You don’t want to have to take out of your 401(k) or take a home equity line of credit. You want to have money that’s easily available when you need it. This will make your ability to respond to these events much less stressful.
Being responsible means to think ahead and plan accordingly. Find a Leap Professional who can look at your whole financial life and help teach you how to be more financially responsible. This will help you avoid future chaos and deal with issues head on.