Use "Money Jar" For Spare: How Not To Go Bankrupt
Updated: Mar 24
Discover practical tips & strategies to steer clear of financial ruin. Learn how to manage money wisely & secure your financial future.
Life can be difficult when our finances are not in order. The worst of it is bankruptcy. And we aren't exaggerating when we say that it can happen to anyone! Knowing a few key aspects can help you avoid it.
Going bankrupt is one of the most stressful and challenging situations. Not only does it impact your finances, but also your mental health and overall well-being.
Here are some ways to help you avoid going bankrupt in your life:
Subscribe to a Good Health Plan
Investing in a health plan can be a smart move to avoid going bankrupt due to unexpected medical expenses. A good health plan can provide coverage for routine doctor visits, prescription medications, and even more serious medical issues that may require hospitalization or surgery.
By having a health plan in place, you can mitigate the financial risks associated with unexpected health issues. When selecting a health plan, consider the subscription price, what are the benefits and discounts it gives, whether there is a maximum cap, does it include pre-existing conditions and so on.
Basically, check if the health plan can make all your medical bills ZERO!
Create a budget
The first step to avoiding bankruptcy is to create a budget. It should reflect your income, expenses, and financial goals. It can allow you to track your spending, make informed financial decisions and help to identify areas to cut back on costs and save more money.
To create one, start by listing your monthly income sources, including your salary, investments, and any other sources of income. Next, list your monthly expenses, including rent, utilities, groceries, and transportation.
Once you have a clear idea of income and expenses, you should identify areas where you can reduce spending. For example, reduce dining-out expenses or switch to a cheaper phone plan.
Build an emergency fund
One of the common reasons people go bankrupt is unexpected expenses, such as medical bills or car repairs. It's essential to build an emergency fund to protect yourself.
It is a savings account that one can use to cover unexpected expenses without going into debt. They should cover at least three to six months' living costs.
To build one, set a savings goal and contribute a portion of your monthly income to your savings account. You can also consider using tax refunds or bonuses for your emergency fund.
Invest in your future
Investing in your future is another essential step to avoid going bankrupt. This means saving for retirement, investing in your education, and building wealth through investments.
Consider putting money in mutual funds and the stock market for your future.
You can also spend money on your education to increase your earning potential and improve your job prospects. This could mean taking courses to improve your skills or pursuing an advanced degree.
Finally, you can build wealth through investments like stocks, bonds, or real estate. While investing carries risks, it can also provide significant returns over the long term.
Manage your debt
The inability to handle and manage debt is one of the leading causes of bankruptcy. To avoid going bankrupt, it's essential to manage it effectively. This means paying off high-interest debt, such as credit card debt, as quickly as possible.
To manage your debt:
Start by creating a repayment plan.
List your debts, including the interest rates and minimum payments.
Prioritise your debt repayment by focusing on the debt with the highest interest rate.
Seek professional help
Suppose you're struggling with your finances and feel like you're on the verge of bankruptcy. In that case, it's essential to seek professional help. Like getting a financial advisor who can help you create a budget, manage debt, and make informed financial decisions.
Consider working with a credit counsellor or debt management company to help you get out of debt. These professionals can negotiate with creditors to reduce your interest rates and create a debt repayment plan that fits your budget.
Do you know you can save money in the long run by investing in a health plan? The Individual Plan from Kenko Health gives you over 50% off on medicines, lab tests, doctor's fees and much more.