Everything we do, or fail to do, has consequences. And, when it comes to personal finances the consequences can be profound. The end result of our actions can be either positive or negative. With money many of us don’t think in terms of consequences, instead we think of immediate gratification. We want something and we want it now! If we don’t have the cash, we can always use credit. Better now than later when it comes to purchases, because it may not be available next week, month, or year, or we presume it will cost more in the future. Besides we’ll always have money and we can readjust our budget.
This type of thinking can get us in trouble
The mentality described above, and its corollary “we can always save later,” is dangerous. I’ve know people who were at one point quite prosperous who are now living in a crummy apartment, or even in their car. This may be extreme, but you can’t know the future. You may not always have good health, a substantial income, a two wage-earner household, a nice home, good job, etc. Miscalculations, inadequate financial reserves, and poor planning can ruin your finances and jeopardize your future in an eyeblink.
Times are Less Predictable
You know it, and I know it. Stability is not a word that describes our society and economy. While you certainly may be a beneficiary of these volatile times, chances are you could end up on the “short end of the stick” just as easily. Look at those who bought their home five years ago at the peak of the real estate market. You wouldn’t have thought that home might be worth half of what you paid for it just a few years ago. But that could be the case. (And, on the other side, there are plenty of people snapping up bargain priced properties now.)
Your employment is probably significantly less secure than it was in the past. And your benefits and retirement plans have probably deteriorated too. Your investments could be better, or worse off as a result of luck, timing, and market conditions.
Be Prepared
The Boy Scout motto has never been more apropos. Being prepared today means having your finances at less risk. Living below one’s means has not been fashionable for some time. However, you need to start doing it. You need to cut your expenses. It is a good time to save for your future, have more cash, and be responsible. “Cash Buyers” are getting the best deals on everything from real estate to automobiles.
General economic, business and social conditions are likely to get more volatile and chaotic. This is not the time to indulge poor financial planning. Get your finances in order, be ready for continuing unpredictable times, and improve your odds for positive consequences resulting from your efforts, restraint, and good planning.
