A recent study by the Federal Reserve Board revealed that 40% of Americans could not cover a $400 emergency. For those households that have credit card debt, they average over $5,000 of it. Student loan debt and car loan debt continues to rise in America.
You may be able to relate to these numbers. Every day seems like you are walking a financial tightrope. One wrong move and everything will come crashing down. This isn’t how you want to live. You desire stability in your finances.
There are those who experience financial stability. What are the practices they cultivate and what can you learn from them?
1. They have a long-term plan. They know where they are going. They have a series of money milestones that they are trying to reach. Do you need some suggested milestones? We recommend the 8 Money Milestones found in The Money Challenge.
2. They have a short-term plan. They have a monthly plan that helps them give generously, save wisely, and live appropriately. And they stick to it. Some call this plan a budget.
3. They automate. They take advantage of technology. They know that automation of giving, saving, and spending helps keep them on track. They leverage their church’s online giving, their company’s automatic payroll deduction for their retirement plan, and their bank’s online bill pay feature.
4. They avoid debt. They know that the borrower is a slave to the lender. They know that significant amounts of debt can lead to their financial ruin. And it kills their ability to be generous.
5. They say “no” to impulse purchases. Many of them have actually grown callous to the temptation of an impulse purchase. Because they simply know that the purchase is not worth its financial ramifications. Purchases are not surprises, but part of a well-considered plan.
6. They don’t make excuses. Do things happen that are out of a person’s control? Absolutely. But financially stable people take responsibility for their own finances. They are not passive, but actively involved. They even plan for those financial situations that are out of their control by having a 3 to 6-month emergency fund.
7. They work hard. They work hard for their income. They know that stable income helps create financial stability. They are good employees. They are not regularly getting fired for poor work habits or performance. Employers view them as an asset, not a liability.
8. They take care of their health. Health care costs can be significant. So they try to take care of their body in the best way they know how. They eat healthy foods. They exercise regularly.
While they know that some health issues are completely out of a person’s control, they do their part in maintaining good health and reducing medical costs.
Here is the good news for you—all of these practices are replicable. They are practices reserved for the few. You can do them. So starting today, take a step toward financial stability.