4 Personal Finance Tips – How to Avoid Going Bankrupt
Bankruptcy is sometimes an inevitable ‘fate’ for individuals and companies. You might go bankrupt after an unexpected turn of events which may be a sudden loss of income, an accident causing an irreplaceable damage barring you from working any further, a natural calamity destroying your livelihood, a drop in the value of shares for your company and stock market crash and so on. Whatever may be the cause, once you’re at the abyss of financial crisis, the best way out is not to take undue risk and file for bankruptcy. These apply to both individuals and companies. But we are not talking about the dos and don’ts of filing for bankruptcy. Instead we will focus on how to avoid getting bankrupt.
Here I have discussed 5 time and tested tips on avoiding bankruptcy situations altogether. Have a look –
- Save More Spend Less – Now you might call me a miser. No, I am not! Instead, I am just trying to emphasize to you to start your savings from the first month of your job or from your first pay check that you receive from your client (in case you’re running a company). Why is that? Because you should ideally save enough amounts to pay at least for 3-6 monthly bills. Saving more when you’re financially stable will see you through during crunch times.
- Plan Ahead For Rough Times – None has seen the future but what’s wrong with anticipating? In fact for business owners as well as for professionals anticipating a negative turn of events in the not-so-distant future isn’t bad at all. We never know what’s going to happen in the next minute, so plan ahead, and stabilize your financial security by investing in shares, funds, properties, gold and insurances. This will keep your future secure and even in the event of an unexpected financial crunch you can bounce back without going bankrupt or filing for bankruptcy either.
- Always Maintain A Low Credit Card Balance – Why is that? Well, it is simply because it might be comparatively easy to pay for a big sum one-time with your credit card but paying a 250$ credit card bill every month can be unbearable for most people. Moreover, if you happen to loss a huge sum and facing a financial crunch, paying even a hundred dollar bill as your credit card fee will hurt you badly. So my suggestion is to always maintain a low credit card balance.
- Use Cash For Purchase More Often – Given that we have all become so acquainted with buying things using our credit cards these days, I may sound like a primitive. Wait! Whatever you may think of this, if you want to avoid filing for bankruptcy altogether, make sure to use cash more often than using your credit card for purchases. For example, if you’re eyeing to buy that new designer sofa make sure you save a little amount from your monthly pay check and then buy it. However if you buy it then and there using your credit card, you have to pay back the amount with an increased rate of interest every month until you pay up the whole amount. In the meanwhile if unfortunately you happen to experience a financial crunch then paying up the monthly credit card bill would look like an uphill task. So think judiciously before investing your hard earned money.
Summary: No one wants to go bankrupt. But you can never predict what life has in store for you. So it is advisable to remain prepared to face every situation as it comes. Here I have discussed 4 time and tested personal finance tips on how to avoid filing for bankruptcy.
Era Lion is an expert financial consultant and counsellor. He has worked with small business owners, enterprises and companies from across the United States and has helped them secure financial stability by offering guidance on achieving Importance of 8a certification. Here he offers 4 personal finance tips on how to avoid going bankrupt.