5 Financial Guardrails that Can Help Protect You from Disaster

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Mountain highway with guardrails preventing a deadly mishap
(Adobe Stock)

While driving a car, you see them every day with little thought or acknowledgement, but those ubiquitous guardrails on the side of the road can prevent a disaster if you start to stray off the pavement. In the same – if not so dramatic – way, creating your own set of budget "financial guardrails" can help you stay on course to achieve your financial goals.

Looking for motivation or inspiration? Check out these five guardrail characteristics and I think you'll see how they might translate directly to how to budget on the road to financial security:

1. Their Mere Presence Provides Comfort.

There have been more than a few times when I've glanced out the window while navigating a potentially treacherous road and the presence of guardrails has put me at ease. A budget or spending plan can bring order to chaos.

Taking the time to map out what's coming in and what's going out and ensuring that all is synchronized to achieve your goals will provide the same sense of well-being I've felt at the sight of those guardrails. No, everything isn't going to always be perfect, but you've got a plan to fall back on … especially if things get crazy.

2. They Are Built with a Single-Minded Focus.

For guardrails, that one word is safety. The overarching purpose of any guardrail you see – and I bet you will be noticing them for a day or two after reading this – is to keep you and others safe.

When it comes to your spending plan, the focus should be on achieving your goals. In my view, budgeting is not an end, but rather a means to an end. That end is simply directing your resources to what is important to you. If you're one of those rare few who find joy in the mere act of tracking every penny, good for you. On the other hand, the rest of us should focus on the good that will come of it.

3. They Are Integrated and Engineered.

As guardrails are planned, safety criteria are utilized to create the design. In a similar fashion, your budget should be an integrated effort among all members of your household and front and center with respect to all you spend.

Your spending criteria can help you shape your spending plan. For example, you might agree that spending above a certain threshold requires mutual agreement. Or you might commit any free cash flow to pay down credit card debt.

4. They Provide Wiggle Room.

Typically, guardrails are not right on top of the road itself. There may be a breakdown lane or some other type of separation. If you're so worried about hitting the guardrail that you overcorrect, the guardrail morphed from a safety solution to a problem.

Same goes for budgeting. I love the idea of having a plan for where every cent goes, but be sure to build in some breathing space to reduce stress and create room to accomodate an opportunity or a surprise.

5. They Aren’t Fail-safe or Foolproof.

Neither a guardrail nor a budget ensures safety or success. However, combined with attentive hands on the wheel, they both can make a big difference.

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