by Gordon Hamilton

Created on: June 09, 2009

The art of how to achieve personal financial stability has always been a mystery for some and with the onset of Credit Crunch and all its many side effects, the concept will to those people appear even further out of reach. The reality is that achieving personal financial stability not only depends upon the financial circumstances of the individual but upon their nature, their natural ability for dealing with money and very often the level of self-discipline of which they are capable.

Let us begin by attempting to define personal financial stability. Might it be defined as being the state whereby a person's income comfortably exceeds their prescribed outgoings and they have the facility and make the effort to put some money by in to a savings account or plan on a regular basis? That definition sounds good to me and is the one which I will adopt for the remainder of this article.

Anyone looking to achieve personal financial stability has to start by looking very closely and carefully at their present financial situation and determining a plan of action, geared towards achieving their ultimate goal. They should make a list of their guaranteed income and one of their fixed outgoings, either on a weekly or a monthly basis, depending upon how they operate their personal financial plans. It is imperative that the person be extremely thorough in this respect if the exercise is to know its full benefits.

It may well be the case that the individual does have opportunities to increase their income by volunteering for such as regular overtime but the likelihood is that they are more likely to be able to reduce their outgoings. This could be achieved in the short term by choosing to socialise less often until they are more financially stable, foregoing membership of any clubs which they do not pay much attention to anyway, or simply eliminating any item listed on their outgoings which they deem surplus to requirements.

The next step is to look at any outstanding debt repayments which appear on the list of outgoings. Are there credit cards or loans which have to be repaid, perhaps even several of them? This is the next - and by far potentially the biggest - step which has to be taken. If there are a number of such debts, it may well be worth considering a debt consolidation loan, which will clear all the smaller debts and allow the total monthly outgoings to be significantly reduced.

The time taken to reduce or eliminate the debt discussed above will vary hugely depending upon to what extent it exists. The reality is that it may be years rather than months. Without tackling the debt in this fashion, however, the person is never likely to achieve their goal of personal financial stability.

Unnecessary expenses can also eat up a person's monthly income quite effectively. This would include eating out at a restaurant when a home-cooked meal would suffice, buying such as clothes which are not necessary on nothing more than a whim, or even taking a weekend trip away which they can ill-afford. All these unnecessary expenses mount up, especially if attempting to repay debt at the same time.

Personal financial stability is therefore achievable for most people, provided they take care to live within their means, keep unnecessary and essentially unaffordable expenditure to an absolute minimum and be cautious or even frugal with their money when they have to be.

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