Congratulations! You’ve made it through your first financial checkup and have calculated how much you (or your combined household) have coming in every month, and how much you spend. You’ve probably identified areas where you’re doing a good job and spots that need a bit of work.
If you’re saving more than you spend, that’s fantastic! For now, that means your cash balance is growing. But it’s important to remain on your toes.
Here’s a list of questions to ask yourself as you look several months out:
1 – Is your job (or those of you and your partner combined) your sole source of income, or do you have any other, possibly infrequent, income, such as stocks that pay dividends? Do you have plans to take on part-time work, or perhaps sell possessions that you no longer need to earn extra money?
2 – Do you find that you have enough to cover everything you need (groceries, car maintenance, seasonally fluctuating utility bills, medical bills, on-time payment of debts)? Can you pay for college or career-advancing coursework, if desired?
3 – Do you have enough to pay for things you’d like to have, such as a vacation, new furniture, or a down payment on a home?
4 – Do you carry high-interest debt? Are you able to avoid one of the worst financial pitfalls of all, the dreaded payday loan? (Crazy interest rates and balloon payments can make these loans quickly spiral out of control.)
5 – Maybe you’ve decided to postpone large purchases, but do you still dribble away money on small, unnecessary expenditures, such as frequent takeout? Are you aware of every monthly subscription you’re paying for?
6 – If you needed $1,000 for an emergency expense, such as a car repair or veterinary bill, do you have it?
7 – Do you have, or have you started building, an emergency fund to cover something as major as job loss or sudden disability? Most experts agree you should have at least three months’ worth of living and debt expenses set aside. (Get your emergency fund in place before you start thinking of longer-term saving goals, and resist the temptation to borrow from it.)
8 – If you lost your job but found another at lower pay, would you be able to adjust your spending to your reduced financial circumstances?
While asking yourself these questions will help move you closer to meeting your financial goals, the most important, especially in a more volatile economy, is to have an emergency fund.
Start small and build steadily. You’ve got this.