A strain on your finances can leave you facing bankruptcy, and there are more reasons for strained finances than simply mismanaging your funds. With more millennials facing issues that leave them in dire straits as far as money is concerned, it’s important to take steps and keep yourself safe from such an eventuality. Have a look below to see five helpful tips that could enable you to avoid bankruptcy and live a financially settled life.
1. Talk to a Financial Advisor
One of the best ways to get a hold on your finances is to talk with a financial advisor. They can help you to make better decisions with your money and understand the far-reaching effects of certain actions and inaction. As such, it may cost you money to enlist the help of a financial advisor, but it will be money well spent. Note that in the United States, bankruptcies in the second quarter of 2016 increased to 25,227 companies from 24,797 companies in the first quarter of 2016. With the assistance of a financial advisor, there’s a chance that some of these companies may have found a way to avoid having to declare bankruptcy.
2. Make and Live on a Budget
It’s important for everyone who is making money to write a budget and live by it, whether they have dependents or not. This is because a budget can help you to limit your expenditure and keep it reasonable as far as your income goes. If you can spend less money than you make and keep saving your money, you will be in better control of your finances. That said, your budget must be reasonable and not restrict your life too much. If you feel that your budget constrains your life and makes things hard for you, then evaluate it and come up with a budget that doesn’t feel like it’s choking you.
3. Increase Your Income
Many millennials nowadays work two or even more jobs, and this is a great measure to take in a bid to increase one’s income. Working more jobs, however, doesn’t mean that you can spend your money haphazardly. The main intention at the end of the day is to increase your savings and improve your buffer against the unknown. While Chapter 7 bankruptcy makes it possible for someone to have their debts discharged in a period of 90 days, according to the United States Bankruptcy Code, you need to minimize your spending if possible. If you’re unable to do so, then supplement your income to the point that you can comfortably keep some money aside each time.
4. Limit the Loans and Credit Cards You Have
Loans and credit cards could make it feel like you have more money than you reasonably do. This is why you must ensure to limit your reliance on them. Don’t take out more credit cards and loans each time your existing ones turn out to be insufficient for your needs. Instead, evaluate why you need more money and you may realize that you can comfortably live with less.
5. Consider Debt Consolidation
Finally, if you have many debts around, consider consolidating them. This will give you a common debt to work on paying off, and it may also help to decrease the amount that you need to pay as interest. Outstanding debt, which makes up 30% of your credit score, can make it hard for many millennials to improve their financial state. This is why you should consider methods of making your debt more manageable and come up with a good plan to pay it off.
Use these five tips to avoid bankruptcy. The financially sound habits that you form now can make it easier for you to take control of your life. This way, you have a chance to enjoy a bright and comfortable future.