How to Plan for a Financial Emergency


Sometimes we just don’t know what life can throw our way.   I know firsthand just how much one unexpected expense can turn into a total financial disaster.   However that was back then, now that I’ve survived a financial emergency I know how to plan for it and hopefully be as prepared as possible.

I know it’s hard to plan for the unexpected but there are a few steps we can take to ensure that an unforeseen financial emergency doesn’t put too much of a dent in our overall financial wellbeing.  I’m sure the last thing anyone wants is to deal with a crisis and worry about being in debt at the same time.

An financial emergency is any event that you did not expect to have and costs money that don’t really have to spend.  This can include anything from unexpected car repairs to last minute travel for a family emergency.  We just never know what’s going to happen and that’s why it’s just smart financial habits to start saving now, in case the worst happens later.

Save anything you can

They say that you should have three months of your total living expenses saved in case of a financial emergency.  The truth is that such a large sum of money can take quite some time to save.  So the way to conquer the goal is to start saving regularly today.

Even if you can’t currently afford to save as much as you want every month remember that saving even a little bit of money is adding up to more than if you didn’t save anything at all.

Don’t invest for the long term

We never know when an emergency will happen.  Although I’m sure we all secretly hope it never will, we have to be aware that it can literally happen at any time.  You could wake up one morning as you always do and be dealing with a crisis by noon.  This means you always need to have access to your money at a moment’s notice.

Emergency savings funds should always be placed in cash or close-to-cash investments such as t-bills or money market funds.  These types of investments are considered to be liquid and therefore give you instant access to the money or at least within 24 hours.

Leave room on your credit cards

Until you’re able to save enough money in an emergency fund one way to make sure you can afford unexpected expenses is to use your credit card.  Of course this is not an ideal situation, but it will get you through the temporary panic.

If you don’t have an emergency savings fund and you don’t have any room on your credit cards I’m not sure what you would do in the time of an emergency.  Maybe you could borrow money from family or friends, but it’s not a good idea to rely on someone else for your financial wellbeing.

Always replenish your stash

If you do end up using money from your emergency savings then make a plan to replenish it after the dust settles.  Unfortunately you just never know when you’ll need it.

Photo from Pixabay


Financial Fitness is a Family Affair


Traditionally, managing the family finances fell to the “head of the household”, usually depicted on the old TV shows as the wise and kindly father. But we live in the real world of the twenty-first century, a world where it is vitally important for everybody in the family, even young children, to be involved in household finances. Although schools are finally adding financial education to their curricula, mums and dads need to take the initiative and begin teaching their kids about money from an early age.

Getting kids off to a good start

Some experts suggest that kids as young as five should be taught the basics of responsible money handling. Earlier this year New York Times money columnist Ron Lieber released a book called “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous and Smart About Money”. Lieber’s message is that money has never played a more powerful – and potentially damaging – role in kids’ lives than it does today.

Lieber suggests that not only should parents answer kids honestly when they ask questions such as how much money the parents make, or whether the family is rich, but that mums and dads should also teach children about ethics, including the social responsibility that comes with money. They should be made aware of those who are less privileged, and parents should teach them responsible ways to share and give.

The author also says that helping children become knowledgeable about money is important because when they are 16, they will be faced with decisions about whether to get into university debt of up to £60,000 (or possibly more, depending upon how things change between now and then). Accordingly, Lieber notes, kids need to be given at least ten years of preparation “before they make what might be the biggest financial decision of their lives.”

One issue that has Lieber concerned is an observed discrepancy between the manner in which parents discuss money with boys and girls. He says, “There’s a lot of evidence that girls hear less about money, talk less about it with their parents and have lower expectations for their own salaries than boys.” Parents need to keep this in mind when talking with their kids.

Children as young as five can understand basic concepts such as the “fun ratio”, in which parents help the youngsters break down the hours of fun they expect to get from a new toy or experience against its cost. Kids can then be guided into comparing that ratio against other purchases they could make. Older kids can be taught the principles of delayed gratification, and kids of all ages can learn responsibility if given allowances. However, Lieber cautions that allowances should not be tied to basic chores; he also recommends that children have part-time jobs if they wish. Encouraging them to work and earn will help nurture their industriousness.

Household chores aren’t what they used to be

This isn’t to suggest that paying kids for household chores is necessarily a bad thing, but simply that their allowances should be an amount above and beyond any compensation they receive for helping out around the house. But household chores aren’t what they used to be back in the day when Father knew best and handled all of the money.

There is an emerging trend of parents paying their kids pretty good money for helping them with tasks that, unlike the chores of old, are a bit beyond the parents’ skill level. According to recent research from Barclays, based upon a survey of 2,000 people, about half of UK parents ask their children to help out with digital chores in return for pocket money. These chores include setting up a new mobile phone, uploading photos to social media, recording TV shows or even creating an online dating profile. And a third of children were also paid to help their grandparents with technology. About half of the UK parents who paid their offspring for tech assistance admitted they have paid up to £20 for an individual digital chore.

Other signs of the times: No longer do the kids spend their “pocket money” on sweets or comic books; their tastes have grown more sophisticated and there are many more choices (and temptations) these days. Accordingly Barclays is launching a mobile banking app, available on iOS and Android, to help 11 to 15-year-olds track and manage their finances.

No substitute for Mum and Dad

Apps and online tools can be enormously helpful, but there is no substitute for good and responsible parenting. Parents need to get on board with their children’s financial education, not only by encouraging them to earn and manage money, but also by getting them involved in helping the family save money. Teaching kids to economise will not only help the family now but will also serve kids in the future.

Maintaining financial fitness in a still-recovering economy can sometimes be challenging for families. But it’s much easier – and even more fun – when everyone shares in the responsibility.

How to Improve Your Credit Score


If your credit score is satisfactory you’ll probably qualify for new credit card and loan offers, but you probably won’t receive the best interest rates. A mediocre credit score doesn’t necessarily mean you won’t be approved for credit, it just means that you won’t have all the advantages people with higher credit scores do.

A lower credit score means that the lender might ask you to put down a deposit in order to be approved for a credit card, loan or line of credit. But why go through all that trouble?  Why not just improve your credit score and make sure you get all the bells and whistles with the lowest interest rate!

It is said that you can improve your credit score in six to 12 months.  It seems that this short period of time is well worth the effort to improve your financial well being and save hundreds (maybe even thousands) of dollars on interest charges.

Here are four ways to improve your credit score:

Make sure your info is up to date

Lenders such as banks and other credit companies use your credit score along with  your income and employment information, current debt balances and your payment history to determine if they want to lend money to you a.k.a. to determine if you’re credit worthy.  Keeping this information up to date is a key factor in improving your credit score.

Order your credit report to determine if your personal information such as home address, contact information and employer are  up to date.

Set up regular payments

There’s nothing worse than late credit card and other debt payments.  Even one payment that is more than 30 days late can really hurt your credit score.  If you want to improve your credit score make sure your debts are always paid on time.

Setting up regular payments is the easiest way to do this.  If you have regular income, set up regular payments to coincide with your pay schedule.  This way you don’t even have to think about logging in to your online banking or app because it’s automated.

Make more than the minimum payments

It would be great if you could improve your credit score simply by making payments on time.  Unfortunately it’s just not enough.  Making debt payments on time is only one part of the equation, but paying off the balance is another part of it.

Lenders also look at your outstanding balances versus the total credit limit.  If your balances are too high your credit score is probably low.  Try to make more than the minimum monthly payments on to all your revolving credit accounts.

Keep your bills paid on time

Some people (probably many) don’t know that your other monthly bills – other than credit cards – are also taken into consideration when calculating your credit score.  Utilities such as your cable and cell phone as well as your electric and hydro bills are considered credit accounts and your payment history factors into your credit score.  If you order your credit report you’ll see these accounts on there along with your loans and credit cards.

Photo from Pixabay

Money Mistakes You Should Make in Your 20s


Being broke is never fun, but some can argue that it’s the only real way to learn about money.  I tend to agree because that’s how I learned.  I made a lot of money mistakes in my 20s and I’m a better person because of them today.   However that’s not to say that if I had learned about debt, spending and saving at a young age that I wouldn’t still be a great person.

If I didn’t rack up a bunch of debt in my 20s and leave it there until I was 30 my life would have been totally different.  I probably would have started travelling a lot sooner and I would definitely have more savings today.  However because of what I went through I now have a strong work ethic because I had to get several jobs to pay off my debt, I understand the value of money because I had to work very hard to pay off all my debt and I am financially responsible because I’m deathly afraid of going back to being broke.

The time to make mistakes is when you’re young.  I don’t believe anyone lives a perfect life.  Mistakes are a part of growing up and becoming the person who we want to be.  The key is to make the mistakes, learn from them and don’t repeat the same mistake several times.

It’s a lot harder to overcome financial difficulty when you’re older, so if you have to learn about money the hard way I say make these money mistakes in your 20s.

Accept every credit card offer in the mail

Having several credit cards doesn’t make you an adult.  It also doesn’t make you financially responsible; just the opposite actually.  In all honesty 20-somethings don’t really need more than one credit card, if you do then you probably have some money management issues.

If you find yourself with several credit cards in your 20s pick the best one and cancel all the others.  The best credit card for you could be the one with the lowest interest rate or the most generous cash back rewards, it all depends on what you need.

Rack up your debt and max out your credit cards

Classic mistake of a first time credit card user.  The good thing (if you can say that) about having a lot of debt in your 20s is there is time to pay it off.  You’re young and full of energy and most likely have the stamina to get a second or third job to help pay off the debt.  This is harder to do in your 30s or 40s when you have several other financial obligations like a mortgage and car payment as well as people depending on you like your family and kids.

Make only the minimum monthly payments

This is a common mistake made in your 20s because you may not have a lot of income.  Some people are still in school and some others are just starting out their careers at low salaries and lots of student debt.  Many people think that making the minimum monthly payments is O.K. to maintain their credit score; this is true, but it doesn’t help improve it.

The credit bureaus take your total outstanding balance versus the credit limit into consideration when determining your credit score.  Even though all your accounts may be paid on time, high balances can be a hinder.

The good news is that none of these habits are extremely devastating to your financial well being and with a little change in your habits they can be overcome.  If you’re going to make some money mistakes this is why it’s a good idea to make them in your 20s.

Photo from Pixabay