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Traffic lights are everywhere – red, green, amber. Green and red are clear – go and stop. However, what does amber mean? Our behavior signals: “Hurry up, hit the red light!” Simply put, the amber light signals that we must prepare to stop.
Likewise, we have signals of our financial condition. We know when we have too much. We are sure when we have a little. However, do we know when we are approaching the Void? Like traffic lights, there are many signs that come up early, signaling us to slow down and prepare to stop spending. Sadly, when these amber lights appear, people speed up, take on more debt, and later crash their financial institutions and families, while their health suffers.
Here are four amber lights that indicate your decisions are causing or will create problems with your personal finances. Consider each of them and be prepared to respond appropriately as they arise:
- Giving to church, charity, Christian service, or to other places or to individuals is reduced or stopped.
- Credit card balances are routinely unpaid.
- No capital fund or target reserve fund has been established.
- The budget or spending plan is not in use.
The bid is reduced or suspended
Some people sometimes feel overwhelmed by their financial condition, and feel they need to spend less. They know they’re spending more than they should, and so they decide to cut back. The first area they cut into is their offering to church, charity, Christian service, or anywhere else. Unfortunately, they respond instinctively because this is the most obvious and easiest to appreciate item. They stopped or significantly cut back, without a comprehensive review of all spending. And they continue to spend in other areas.
In these circumstances, when you are considering cutting your donations, understand that the pressure you are feeling is an amber light telling you to stop and review all spending immediately – red light here!
Look at your overall budget, review your goals and plans, and remember the reason for giving. You know the lifestyle choices you’ve made, so it’s easy to see where your stress is coming from. Examine your spending decision actions, recent spending decisions.
This is the first significant sign that your finances are under pressure. I notice. Before you change your giving, think, pray.
Credit card balances are routinely unpaid
A credit card gives you a minimum “grace period” from the date the charge is charged to the day you pay the total amount due. Canadian regulations implemented in 2010, Imposing an effective grace period of at least 21 days and interest free on all new credit card purchases when the customer has paid the outstanding balance in full.
Accept this grace period as your total credit period. Pay the full balance monthly; If you can’t, this is your amber light. Monitor that stop using the card. Put it in a freezer bag and store it in the freezer. Don’t “speed” to beat a red light. Stop!
No capital fund or target reserve fund has been established
What causes the most stress in the family budget? Emergency cases. The car broke down. The washer dies. Your microwave, stove, or other household item stops working. You can’t predict when one of these items will arrive, but you can expect to spend on one regularly.
That’s why each of us needs a capital fund: a plan to avoid going into debt by systematically saving for specific expenses with unpredictable timing. From the planned, targeted savings.
Typically, individuals borrow, using their credit cards or lines of credit for first-time purchases, replacements, or repairs of major items, such as cars, refrigerators, stoves, furniture, and appliances. This is a cumbersome, costly, and irregular approach to maintaining and replacing components that the Capital Fund is designed to remedy.
The capital fund is an addition to your operating budget. Simply put, to replace a $1,000 item with a lifespan of up to ten years, set aside $100 per year for ten years. In the tenth year, if you replaced the element, repeat the procedure. If you don’t, keep putting money away. Anticipate major repairs over the life of the item and apply the same procedure. Imagine the interest charges you wouldn’t incur if you used your equity fund to pay cash for everything but the house!
Do you have no capital or its equivalent? This is an amber light screaming at you to stop and take a note. Will you think about this today?
The budget or spending plan is not in use
Wherever you go, someone, a company, a group, or a ministry is trying to get you to spend. At the mall, at the supermarket, on TV, on the radio, there’s a commercial urging you to buy that awesome gadget, get a helpful book, or get a great service. It may cost only $5.00, only $2.00, or only $10.00; So you buy it. I forgot that the sum of these sums is “only” a large sum.
Basically, we let ads drive our spending. This is why we need a money map to use as a roadmap. A money map, spending plan, or budget is a guide that we prepare before an event or period to plan how to spend the money available in that event or during the specified period.
When you leave home without a financial map or budget, it is like leaving home on a trip to an unknown place without a road map. will be lost.
Daily work without a budget is another amber light. Slow down and be prepared to hold back, or you’ll only get deeper into debt. Decide today to start using a budget to help allocate your limited resources. You’ll be glad you did.
Conclusion
When any of these amber lights start to flash, look at your lifestyle. You may need to modify your behaviour. Bankers, insurance agents, and other salespeople who call themselves financial advisors will look at the symptoms and offer money-centric solutions: remortgages, refinances, debt combinations, and everything that deals with money, rather than addressing your situation, behavior, and choices (ABC). .
Changing your ABCs is the only long-term solution to your finances. Other treatments only delay needed changes in attitudes. Are you ready to make the tough lifestyle adjustments required to rebuild your finances for the long term? Always remember that money management means lifestyle management.
Copyright (c) 2011, Michel A. Bell
