If you haven’t set money aside for a rainy day, you’re one job loss or illness away from financial ruin. Most consumers should save between three and six months’ worth of living expenses in a liquid interest-bearing account. Those who are self-employed or work in a high turnover industry should have up to a year’s worth tucked away.

When you make your budget plans you need to plan for some of your money to go to entertainment and fun. If you do not set your personal budget up this way you will find it to be to restrictive and likely not follow it. You need allocate some of your income toward fun and entertainment and budget for it by cutting out some other expense.

Failing to face financial realities is what financial planners call the “ostrich syndrome”. Those folks hide their heads in the sand when dunning letters start coming in and they quit reading the mail or answering the phone. Or the bills mount up and they count on winning a lottery. This is prelude to disaster. Know your financial status, even if it hurts. Then, if necessary, take steps to improve it.

Underestimating the cost of ownership is a problem for many consumers. The original cost is sometimes not the only cost of ownership. This is especially true of an automobile. Many of the costs are obvious but some get overlooked. If a car is bought on an installment basis, monthly payments are just a small part of the cost of operating it. You are cautioned to think about all the costs. Operating expenses are: gas and oil , repairs, maintenance, tires, insurance. Other costs include registration, license, parking, tolls, etc. In addition, a new car costing $11,000 depreciates in value by about $2,500 during the first year. While depreciation is not an out-of-pocket cost, it does become one when the car is traded on another one.

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