Loss of income
Losing a primary source of income (probably you were laid off or fired, or a sudden decline in revenue for your business) can be severe especially in the area of finances. When circumstances like this happen, it’s easy to find yourself overwhelmed by bills and expenses. Debt can follow quickly.
One of the smartest safeguards you can establish for yourself is an emergency fund. Ideally, this fund can sustain you while you try to replace whatever income was lost. Ask yourself, Is your emergency fund as big as it should be?
An unexpected emergency
You may crash your car. Or you may get really sick, and find your insurance will only cover a portion of your bills. Many people find themselves in debt because they aren’t prepared when big, bad, expensive things happened to them.
You may have to anticipate possible big expenses to some degree. How old is the roof on your house? How old is your car? How’s your health, in general? It’s impossible to know the future, but you can prepare yourself for certain
Keeping up with the Joneses
Your best friend just bought a new sports car. Your Instagram friends are sharing photos of their latest tropical vacation. Your brother-in-law just purchased a home twice the size of yours. It can really sting when you feel like you have to go without. And like many people, you may feel pressure to “keep up” with lavish lifestyles.
Chasing a lifestyle you can’t afford is a recipe for financial disaster. No one is implying you don’t deserve to treat yourself to nice things or vacations once in a while; but if you can’t actually afford those things, what favors are
you doing yourself?