It’s January, you’ve overspent on the holidays, and to be honest, you weren’t doing very well before then. Worldwide, times are tight. Food and fuel cost more than ever before, and if you’re not part of the 1% of the world that has no financial worries, chances are you’ve had to tighten your belt and are wondering if you really need that life insurance policy.
What tends to happen in times like this, is that people – being people – hang on to their little luxuries and start to consider cutting out things that don’t really feel as though they have immediate value: life insurance, funeral cover and investments. And actually, this is the worst possible thing you could do – it will make you extremely financially vulnerable.
Most people don’t cancel their life insurance – they just let it lapse, which is not a smart move. Not only will you lose peace of mind – you’ll also lose any investment value you have built up. It’s far better to go without satellite TV and know that if something happens to you, your family has financial security.
So what do you cut? Well, it’s January, and a good time to have a long hard look at your life and set some priorities. Financial security has to be a bigger priority than lifestyle luxuries: there’s simply no contest.
It’s very instructive to sit down with a bank statement and add up how much you really are spending on various items. You very soon start to see what the trends are – and where you could cut down. We tend to underestimate what we’re spending on everything, and then can’t understand why we have no money at the end of the month.
Once you’ve done that, try to kick your bad habits first – smoking, internet gambling, drinking and fast food. Get rid of those nice-to-haves like wine clubs and expensive extra-murals. Look at your data packages – do you really need 100 gigabytes a month? Could you drink water instead of all those sugary energy drinks? Could you make tea and coffee at the office instead of drinking designer frappuccinos with hazelnut froth? Are you actually using your gym membership?
All of those extras add up really quickly, and it’s far better to set your sights on long-term security than the instant gratification that does nothing for your peace of mind. It won’t be forever, and when you have everything back on an even keel again, then you can think about which of those luxuries you want to reintroduce.
