It is not easy to plan ahead when you are broke. However, your best option at a time like this would be to plan ahead. It’ll stop you from being broke, so that you can start rebuilding your strong financial future.
Those who have a good financial strategy save more money, are financially healthier, and live longer and happier lives. Those who don’t do this, face a ton of difficulties throughout their lives. For instance:
People who thought and planned for their retirement majorly, somewhat, or even just a little, when compared to non-planners, end up with twice the accumulated wealth. Using a retirement calculator is also shown to increase a person’s likelihood to save.
Those who plan for their children’s education save as much as 80% than those who don’t plan!
People who plan for irregular, large and unexpected financial expenses are 10 times more likely to have a healthy financial life in times of monetary problems.
Some studies have defined financial health to be retirement and emergency savings, along with a good credit score, sustainable debt loads, and property. It includes health and life insurance as well. Your financial health increases with age, income and education, and that increases the likelihood of planning your finances.
Those who do not plan do not focus on future expenses. What they are doing is planning for the short term only. And that is like expenses for the next week, or next year. The problem here is they will have great hardship to remain debt free in the future since they don’t have a long term plan.
This problem is more common than you think. If you are constantly worrying about your financial problem, it can be hard to plan ahead since you are concerned with your current issues. Unfortunately, our brains are wired in a way that it over-thinks problems. That’s an evolutionary defense mechanism to let us get rid of problems soon, but if the problem is a long-term one or if it is too pressing, it can easily make one worried and unfocussed. A scarcity mindset is not a good way to be. It affects not just your personal finance, but your personal relationships, and even your job.
When you have less mental energy due to constant worrying, you can’t focus on what needs to be done to solve the problem. By the way, being constantly preoccupied with problems drops your IQ by 13 points, as does staying up all night.
Here is what helps. Cut yourself some slack, seriously. If you are strapped for time all day, give yourself 30 minutes to deal with all unexpected things happening. If your problem is financial, try to save a bit of money for a ‘rainy day fund.’ Even a few hundred bucks can do wonders, and can take a bit of load later on in times of hardships.
Next, you have to save a bit more for yourself. This means saving a part of your monthly salary before paying bills.
At the end of the day, it does not matter how you save. It matters that you start saving.