This blog post was written as part of a sponsored program for State Farm®. All views expressed are entirely my own.
Life can be unpredictable and quickly change from one day to the next. It’s one of the reasons why I’m now proactive about the financial decisions I make. Over the years my husband and I have experienced involuntary job losses along with a bout of illness. If you’ve ever experienced a sudden loss of income, or found yourself unable to work, you know how scary it can be. Both of these experiences negatively impacted our finances and caused some of our long-term goals to be put on hold.
I can’t go back in time and undo the mistakes we made, but I can choose to make smart choices going forward. May is Disability Insurance Awareness Month which makes this the perfect time to share with you smart money tips to help you prepare for the unexpected. I hope these tips will encourage you assess your family’s needs and propel you to take action.
Smart Money Tips for Moms
Plan for an emergency
When I lost my job unexpectedly five years ago, I went into panic mode. We were already living paycheck to paycheck, so saving for an emergency wasn’t even a thought. The days that followed my job loss were rough on our finances and put a strain on our family. Looking back I wish we had saved up enough income to help carry us through those months. Even if you don’t have a lot of residual income at the end of the month, start setting aside a small portion of your earnings and place it in a separate savings account. Find ways to cut back on your expenses in order to increase the amount you save each month. The goal is to have at least 3-6 months worth of expenses saved up.
Debt can often be a roadblock for those seeking financial freedom. You can’t ignore it nor continue to accumulate it without it impacting your finances. When my husband and I decided to tackle our debt, I was shocked by how much we were paying in total for our auto loan, student loans, and medical bills. The monthly amount was close to $1,000! All I could think about was how much freedom we would have if we could wiped out our debt. It was the motivation I needed to create a plan that would help us pay off our debt within 2 years.
We started with our smallest debt and paid more than the minimum each month until it was fully paid off. Next, we applied that monthly payment to the next smallest debt that we wanted to tackle. This method created a snowball effect that helped us wipe out our debt sooner.
Track your spending
For many years I had a great paying job with excellent benefits, but the moment that all went away I had nothing to show for it. I was so caught up in the earn money and spend it cycle that I never put much thought to where my income was going. In order to track your spending, all you need is a daily spending tracker form to help you get a clear picture of where your income is going. This will enable you to make adjustments and cut back where necessary. Keeping track of my spending enabled me to save hundreds of dollars each month because I was able to pinpoint our money wasters.
Protect your income
According to the Life and Health Insurance Foundation for Education (LIFE®), almost one in three workers will become disabled for three months or more during their career. We protect our home and our vehicles, however, we fail to protect one of our most valuable assets – the ability to earn a paycheck. Most of us can’t afford to lose our income, yet according to the U.S. Social Security Administration approximately 100 million workers are without private disability income insurance. You might be thinking this can’t happen to you, but consider the outcome if it did.
Even if you have income saved, is it enough to carry you through a year? Three years? Imagine what the loss of income would do to your long-term financial goals and how it would affect your current lifestyle. The potential outcome is simply not worth the risk of forgoing disability insurance. Choosing to protect yourself in the event that you become disabled could be the smartest financial decision you ever make. If you need assistance, a State Farm agent can help you determine the options that are available to you. In the end is not about money, it’s about making smart choices that will give you a peace of mind and protect your family’s future.
Have you suffered a job loss or loss of income in the past? Please feel free to chime in with your own tips, questions or comments. As always, I love to hear from you! Also make sure to check out the infographic below to learn why it’s so important to protect your paycheck.
This post has been sponsored by State Farm. All thoughts are my own.