Knowing how to manage personal finances is the cornerstone of being able to successfully build wealth. Accordingly, how to manage personal finances has never been as crucial a subject as it is right now! It has been four years since the start of the “Great Recession” and the ensuing jobless recovery. The housing market remains depressed while home foreclosures and short sales continue at a distressing rate.
How Are You Doing?
If you were a true member of the “wealthy class” in America at the time of economic tsunami and not overly burdened with debt or other forms of exposure to financial loss, you are probably still relatively comfortable and perhaps even profiting from the current economic situation.
If you and yours resided within any level of the “Great American Middle Class”, the odds are better than even that you’re experiencing some degree of financial hardship. The economy has taken a long-term change for the worse, presenting you with the challenge to survive and overcome.
The weak financial foundations of an alarming number of Americans were exposed by the meltdown of “08-09”. Too many individuals/households, some with excellent incomes, were living on the bubble while not employing sound principles on how to manage personal finances.
Those who were experiencing the most financial distress may have also suffered through bankruptcy and/or home foreclosure. Now, as we wrestle with the post collapse “New Economy”, what will it take for working class / middle class Americans to regain viable financial status and direction? What should we be doing now?
Seek Information About Managing Your Personal Finances
It is probably accurate to state that most adults are intuitively aware of timeless maxims such as, “do not live beyond your means” and “save for a rainy day”. The problem is that too many people simply don’t follow this advice. In the New Economy, Americans will have to seek information on how to manage personal finances and acquire the discipline to apply it. In addition to becoming better money managers, we must also find ways to earn more income in an environment of fewer jobs and stagnant salaries/wages
Some of the elements comprising the “weak financial foundations” mentioned above are:
- Excessive materialism / impulsive buying
- Lack of savings
- Excessive use of “toxic” debt such as credit cards
- Living from paycheck to paycheck
- Not developing spending & savings plans based on budgeting finances
- Depending on too few sources of income
Commit To Your Own Rescue
Focus on three areas.
- Address bad habits and commit to learning how to become much better at managing your personal finances at all levels. Intelligently manage your use of credit (especially credit cards) and learn to use budgeting finances as the basis for controlling spending and anchoring your overall long-range personal financial plan.
- Regardless of your background, education or experience, find ways to generate income from multiple sources. It can be done.
- Gain a working knowledge of how to invest, which, along with saving money will create wealth for your future and potentially that of your descendants. There are plenty of books, courses and online resources to help you. If you seek the services of a financial professional, make sure that they are certified and do not have a financial interest in any investment products that they may present to you.