Money management: A little discipline helps to avoid the deadly trap of financial ruin

Money management: A little discipline helps to avoid the deadly trap of financial ruin
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Published December 6th, 2015 - 05:28 GMT via

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Financial problems can lead to stress-related illnesses and relationship breakdowns. (Shutterstock)
Financial problems can lead to stress-related illnesses and relationship breakdowns. (Shutterstock)

If you have been through the 2008 financial crisis, you probably remember the many suicide cases across the world, which were triggered by the financial crisis. Ordinary folks, top hedge-fund managers and simply people from all walks of life who saw their investments crash couldn’t handle the loss and took their own lives. Although these cases were sudden and well-publicised, everyday bad money decisions kill people — a slow, painful death.

Money management is a necessity. Yes, money can’t buy happiness, but its shortage can trigger a lot of distress. People who fail to keep their finances under control are prone to major crises in cases such as job loss, a significant illness that requires expensive medical care, or similar situation. These crises can undermine their emotional and physical health, sabotage key personal relationships and end up placing them under massive stress — that is a cause for many heart conditions and hypertension.

So, although one impulse purchase or one wrong investment won’t land you in a hospital bed, a series of wrong steps will certainly do. And even worse, you won’t be able to afford these additional medical bills to take care of yourself.

So what can you do to avoid money-related stress? Take financial planning seriously. It is not luxury; it is your ticket weather life’s ups and downs more smoothly.

Here are few points that you must keep in mind.

Start planning early

Many people begin their planning when they see a crisis on the horizon, which proves to be too little too late. If you want to build a good financial cushion for a rainy day, you must begin your financial planning (including savings and investments) as early as possible.

Even if you’re a young professional who doesn’t see many commitments in the near future, plan your money wisely. The more you help yourself have a sound financial standing, the better you will be positioned for whatever comes your way — be it starting a family or handling unemployment. Needless to say, you will also reduce the stress associated with such life events significantly.

Have appropriate goals

When you’re 20 something, you may want to travel the world and drive a luxury car. Although these are valid aspirations, it is also important to look into some less-immediate goals — such as setting aside an emergency fund and planning for retirement. At this stage, these long-term goals may not appear to be as important as when you’re in your forties, but the reality is they are just as critical to your welfare on the long run.

In addition, be realistic about how much you will be to save or investment. If you’re on a tight budget, you’re probably putting aside very little, which is still better than nothing but doesn’t provide the sort of cushion that helps you feel financially secure. The solution is to look into ways to increase your income and the share that goes into this long-term financial planning.

Know the symptoms

Even the most disciplined financially can come across a problem that throws a wrench in their plans. During this crisis whether it is personal (death, divorce, etc) or professional (job loss, investment loss, etc) you probably may be handling many issues and emotions. It is, however, important to turn around and find a solution to your financial woes as soon as possible. The earlier you approach your creditors, the more likely they will be able to work out solution for you. In addition, your problems probably will be still manageable.

For example, if you’ve lost a job and piled bills on a credit card, a bank may work out a repayment plan that comes at a much-lower interest rate than if you just leave the debt to spiral on your card. All you need is to be able to find a new source of income or show the lender that you will be able to commit to the plan.

Along with these crises, you also must be on alert for signs of stress. Again, the sooner you address the problems and find solution, the better for you financially and mentally. If you’re unable to handle the pressure, it is always a good idea to seek help from a professional financial planning to find you a solution that restore your peace of mind.

By Rania Oteify

© Al Nisr Publishing LLC 2016. All rights reserved.

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