The much talked about and dreaded US fiscal cliff ended with a tax deal and without causing much damage to the financial system. There are sighs of relief all around that the US economy is on the right course to a full recovery. This doesn’t mean you should be complacent about your own personal finances, however. For many Americans, times are still tough and the chances of being laid off or becoming bankrupt are still high. But the recent economic crisis has taught us all one thing and that is to be adequately prepared for the future.
As a general rule, we Americans tend to think ‘big’ always – like big car, big house, big apartment, big wedding and practically ‘big’ everything. In good times, thinking big is good for business, which ultimately comes handsomely back to you. However, when the national economy and your own finances begin to go down the drain, thinking ‘big’ usually lands you in a financial pit that will take you years to climb out of – possibly never.
The point is you have to be prepared for all kinds of eventualities even if the going is good for you at the moment and there is a big wad of cash in your bank account. Here are some tips on how to avoid your own personal financial cliff.
Stash away some money for emergency use: This should probably be your rule number one for financial prudence. No matter how little you can spare after your monthly expenses, stash away some for the rainy days. You may have to deny yourself some of your favorite things, but that’s a lot better than having no money when you need it the most. Don’t be too concerned with the extremely low interest rate that your bank gives you; just keep this money liquid and accessible so that you can have it if you need it at a moments notice.
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