Greece’s debt is extremely high. Spending more than a country can afford, creates debt or borrowing, the same as personal debt (credit card, loans, overdrafts, a line of credit, investment loans or mortgages, etc).
When a country has a budget deficit and ‘floats bonds’ in the global market place (borrows) it means this country is in debt to other global lenders – the EU countries with stronger economies that are in surplus and have money to spare.
Read the papers, watch TV and keep your personal situation in perspective.
So what does all this mayhem in the world’s capital markets mean?
The broader Toronto stock market, represented by the S&P/TSX Index is down 20% since May 2011, with wild swings depending on what’s written in the financial pages in both print and electronic media. No one knows what will be the outcome of the European Union leader discussions – speculation and fear sells news.
What could all the gloom and doom in the papers mean for YOU?
Contributing more money for the bail-out of Greece or any country in deep financial crisis means building more risk controls and better stronger bank balance sheets for all EU banks – which means fewer loans for private and public spending, less spending, less job creation, that may lead to cost cutbacks in your own firm if it’s a global player and as a result you may lose your job.
So…what do you do to protect your lifestyle and keep a good night’s sleep?
Your best course of action in this chaos is to get your own personal financial house in order – like governments that are lenders, do.
A fool-proof way to get in control of your situation has 5 parts:
1) Take out some ‘me – time’ and with your favorite tart or doughnut in hand write down your financial goals and when you want to reach them. They can be as unrealistic as you want…dream a little, it’s fantastic for the soul. Who said miracles don’t work? They do! All that is required is some smart thinking on your part!
2) Spend only what you can afford and spend less than your paycheck.
3) Have an emergency or a disaster-plan in place, like a TFSA, or a high-interest savings account that is a short-term buffer, to meet unforeseen negative events in your life – like losing your job, death of a spouse or unexpected bills.
4) Pay-down high interest borrowing as fast as you can.
5) Protect your income-generating ability: get professional help to buy adequate and correct insurance coverage.
Take charge of your financial lives, Ladies, it’s the best gift you can give to yourself and you’ll get ahead of the average person, who fumbles along unprepared for life ….And…. do reward yourself by buying a good lipstick, or that great handbag or those heels, while you’re working on it, because ‘you’re worth it’ !
Aaliya Dossa is a financial adviser specializing in helping women with their finances. To reach Aaliya send her an email to firstname.lastname@example.org.