Working well past the point of retirement. Graduating from college in debt with no plan of action to pay off the student loans despite looming interest rates. Having to foreclose on your home due to a lack of funds.
Don’t let a worst-case financial scenario bring you to the brink of financial destruction.
Before it’s too late, becoming more financially astute starts with being aware of what condition one’s finances are in and taking control of those funds — saving, prioritizing, budgeting and removing what’s not needed.
From maintaining good credit to building a nest egg – saving savvy doesn’t have to be a chore and it can happen at any age.
Savings is a foundational piece to financial health since research has found that unexpected expenses, like car repairs, can become a hardship when people don’t have access to emergency savings funds.
“When it comes to saving, the most important thing to do is simply to start. Whether it’s $1 a day or a few every month, it is important to have a plan. Talking to someone with experience can help others see things from a different perspective. One of my favorite conversations to have with customers is to know what they are saving for and helping them figure out how to get there,” said JPMorgan Chase’s Detroit Community Manager, Gail Taylor.
Engaging in conversations about money is a good way to get feedback, advice and suggestions on your approach to savings. No matter your goal, seeking advice can help you build skills, create a plan that can be adjusted along the way and get help and support to achieve it. A great way to start a conversation is by reviewing your budget and savings goals with an expert.
USA Today reports that financial planning doesn’t happen by accident but through well thought-out and intentional steps toward success.
Experts agree. It’s important to periodically review one’s financial plan to determine if adjustments are needed, particularly given the economic and personal impacts of the COVID-19 pandemic.
“If your circumstances have changed, your financial plan may need to change, too,” the article reported.
If a person needs a financial refresh to get there, consider seeking the help of a certified financial planner professional who can help you set and achieve goals, like:
- Affording a comfortable retirement.
- Taking advantage of saving and investing opportunities as you age, estimating your expenses in retirement, and preparing to have enough money to cover those costs for your lifetime.
- Buying a home.
For more information visit LetsMakeAPlan.org to find a CFP professional.
Forbes noted in an article about How To Create Your Worst-Case Scenario Budget, that the pandemic taught people about planning in case of an emergency and budgeting for themselves and their families.
This includes being abundantly clear on fixed expenses and knowing how to spend a certain amount of money each month as opposed to blowing it on fun funds beyond the budget.
Some fixed expenses include:
- Rent/mortgage
- Utilities
- Debt/loan payments
- Subscriptions
- Insurance
- Healthcare costs, such as co-pays and prescriptions
Also, knowing which expenses can be removed goes a long way, too, and weighing flexible spending options is just as important.
The article defines flexible spending as something that people have more control over with fluctuating costs like food, transportation and shopping. The article added that one needs to exercise self-control in these flexible spending areas, which will help people learn how to cut or reduce their spending completely.
Ascent, a free learning platform for women entrepreneurs, echoed similar thoughts, especially for business owners.
When it comes to projecting one’s best- and worst-case financial scenarios, map out financial forecasts to scope out the impact of changes in strategies and tactics in pursuit of your business goals.
It is recommended that people wanting to spruce up their budget do so by identifying multiple scenarios in order to:
- Plan for expected financial returns or losses.
- Stay proactive in business decisions.
- Mitigate risk by planning for worst-case scenarios.
“Most often, business owners will plan for a few different scenarios: base [or regular] case, best case and worst case,” Ascent noted. “Your base-case scenario is the average financial outcome that is most likely to happen if you make no real changes. Your best-case scenario is the best possible financial outcome if everything goes according to plan. Your worst-case scenario is the most unfavorable possible financial outcome for your business.”
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