By Jennifer Waddell, Vice President of Axiom Bank

As the old adage goes, “The best time to fix the roof is when the sun is shining.” If you can save money when things are going well, you’ll be ready when trouble strikes. In the face of life’s costly surprises – sudden job loss, unexpected medical bills, major home repair – having some money set aside can make all the difference. 

For those who are already in tough financial straits – like the millions of Americans who are still impacted by the economic cost of the COVID-19 pandemic – it may seem like the moment to prepare has passed. But that’s far from true.

In reality, it’s never too early to take charge of your finances – or “too late” to enjoy the benefits of planning ahead. Here are two keys to financial health that anyone can put into practice, no matter where you stand:

Deal with Debt

When handled effectively, debts – like mortgages, start-up loans, and student aid – can be a normal part of your financial life. But when unmanaged debts start to stack up, so do their long-term costs. While saving money can work as a “shock absorber” against financial stressors, debt does the opposite: It makes you more vulnerable to sudden emergencies.

When it comes to repayment, your first priority should be high-interest consumer debt, such as a credit card balance. After that, look at your remaining loans and start scheduling weekly or monthly payments. An online calculator can help you decide what process works best.

No matter how you prioritize your loans, make sure you can cover the minimum balances on all your debts. Consistency and good habits strengthen your credit score, whereas unpaid bills are hard to erase from your financial history.

If your household is deeply in debt, or if you can’t really make your minimum payments, it may be time to consult a debt counselor. Look for reputable agencies like the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA).

Save Smart

Experts agree that an emergency fund – a savings account that can cover several months’ worth of household expenses in a crisis – should be your top priority after meeting basic expenses. The fund acts as a buffer against your next rainy day, so you can pay bills and handle necessities without resorting to high-interest debt.

According to experts, it’s a good idea to save at least 20% of your monthly income.
Money tends to slide through the cracks, especially with the convenience of debit and cashless apps. Sit down with your bank statements, loan payments, utility bills and credit card receipts – in paper or through an online account – and go through them with a fine-toothed comb before you plan your budget.

Create your budget based on the money you have, not including credit limits. A good test is to ask yourself, “If I paid for everything in cash, would I make it through the month? Would I make it through the month after that?” If the answer is no, the budget isn’t sustainable.

Make saving the first thing you do – before budgeting your expenses or bills. Determine a dollar amount (or a percentage of your paycheck) that you can comfortably set aside at the beginning of each week. Remember: This is a long-term commitment, so keep it realistic. If $25 a week is too much, start with $15 or $10. Remember, no amount is too small to save.

When trouble strikes, you may need to access your money promptly – so don’t store it solely in investments or a limited-access account. Instead, create a savings account designated for emergency use only.

Whether you’re paying off debt or starting an emergency fund, keep in mind that this isn’t a commitment of just a few weeks or months. Financial health is a lifelong goal. Take time each week or month to check in on your objectives – and don’t be discouraged when you make mistakes: Regroup and try again. By starting today, you’ll be ready for whatever tomorrow brings.

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