Barbara Hause MBA

Synopsis: Plan now to have a good year

Imagine yourself climbing up a steep cliff using a thick rope for support to get you to safety.  The cliff is so steep you cannot see the rope fraying at the top.  You are relaxed and complacent because you mistakenly believe that your rope is solid and that you have plenty time to get to safety. 

Suddenly someone warns you at the top of the cliff that your rope is fraying, rapidly getting weaker, and may break before you can get to safety.  Now your thoughts move you from being relaxed and complacent to panic.  If only you had climbed faster at the beginning and gotten to the top before the rope frayed, you would not now be facing disaster.  The fraying of your rope is like poor money habits that will fray your secure financial future.

While we all hope for the best; the prudent also plan for the worst -- that is why even the best running car has a spare tire.  And while flat tires are not inevitable, history shows that good times are inevitably followed by uncertain ones.  In short, those who continue to live paycheck to paycheck are simply courting disaster; it is only a matter of time.

Of course, today’s credit cards, lines of credit and easy to access money whenever you make a decision to purchase make preparation for harder times seem unnecessary.  But circumstances can change with frightening suddenness.  Even if your job is secure, ask yourself what will happen if your expected tax refund check, inheritance, gift money, investment or bonus fails to materialize as you expect.  If you do not have a viable back-up plan, you are gambling; not planning.  

When it comes to money a little planning can go a long way.  Day to day most of us do not fall short by large amounts of money; so the amount we need to correct on a daily basis, is usually quite small and well within our means of correction with little effort and inconvenience.

Just like climbing up the steep cliff, with a little more effort and planning you could decide to climb faster.  You may even decide to have a second rope available as a back up if the first rope started to fray.  Your chances of making it successfully to the top would have been much greater and eliminated a lot of grief and stress.

Before the New Year begins is a great time to review the past year and plan for financial success in the New Year.  When you start now you will have time to adjust your plan throughout the year.  It is when you choose money smarts over complacency you can ensure you will not be sweating it out financially at the end of your frayed rope in the coming year.