How to avoid financial problems.

Many people I know had financial problems at one point or another. Some even didn't know how they ended up in financial difficulties when they have stable jobs and good educational backgrounds to speak of. The fact is, having a college degree and a high-paying job can’t make you less vulnerable to financial problems.

Some people may not know it yet but they are already in or on the verge of a financial problem. To help us evaluate our financial standings, let’s ask ourselves the following questions?

1. Do you always have to work overtime or take other jobs or sidelines to cover for your basic living expenses?
2. Do you need to borrow money to pay existing personal loans?
3. Are you paying your bills late?
4. Have you surpassed your credit card limit?
If you answered “yes” to all or most of the questions above then you may need to sit back and analyze what you are doing wrong in terms of your finances.

Here are some tips on how to avoid financial problems:

1. Live within your means and keep track of your spending. If you spend more than what you make then you are bound to fall into a financial trap. Live a simple life and you will find everything in life easier.

2. Don’t use credit cards. Steer clear of these traps. Temptations to buy luxury and unwanted items will be hard to resist, if you have a credit card. Once you get the hang of using this devil, it will be hard to climb out of it.

3. Stay healthy. You’re lucky if you have sick leaves or health insurances to speak of but even if you have these, you are still on the losing end as you lose the opportunity to be more productive and to earn more if you are sick. Avoid too much stress and live a healthy lifestyle.

4. Set emergency funds. Most of us live from paycheck to paycheck with no savings or extra money in our bank accounts. So in times of emergency, we have no other recourse but to take out a loan which requires paying high interests, use credit cards or resort to other means. These will not be necessary if we have an emergency fund. In addition to your regular savings, allocate at least 20 to 30 thousand pesos for this sole purpose and you will feel more secure in case emergency strikes. What if you suddenly lose your job? How will you pay the bills while looking for another source of income?

5. Lastly you need to maintain a balance of work and fun. Work hard but don't forget to relax from time to time. Burnout will not do you any good and may even cost you your job. If you are healthy and with good disposition, you will be able to handle any stress and financial problem that comes your way easier.