But staying out of bankruptcy in the first place is a better alternative. Avoiding bankruptcy is not a cure, however; it is a preventative. It can take a disciplined plan and a conservative frame of mind. It will affect your lifestyle. It will also give your children useful lessons on how to conduct their lives when they are grown.

The first step in avoiding bankruptcy is to lower your expectations about your lifestyle. A person can have great happiness without a lot of expensive toys.Our grandparents had an easier time living frugally because there were fewer toys available, particularly electronic gadgets. They had only one television in the living room. They didn’t have cable or satellite TV. (In fact, there were no satellites at all.) There might have been a hi-fi, or at least a record player, but they didn’t have a CD player or MP3 player for every member of the family. The secret is to take part in activities that do not cost much money. You might want to try bicycling, camping, hiking, digital photography, and cooking.

The next step is to plan a budget and stick to it. At the beginning you need to track expenses to see just what the requirements are for housing, utilities, food, clothing, transportation, insurance, and so forth. There are many ways to keep down flexible costs such as food and clothing. You can keep food costs down by, first of all, cooking your own meals. When you buy wholesome fresh meats, vegetables, fruits, and other healthful ingredients, you can cook nutritious meals for much less money. More money can be saved if you shop in a warehouse store and buy in bulk. Clothing costs can be held down by shopping at stores that sell gently used clothing. This works especially well for clothing for your kids because kids tend to outgrow their clothes before they wear them out.

There is one more important aspect to your financial planning scheme. That aspect is planning for your retirement. It is vital that you start saving for retirement at as early an age as possible. When you are young, you don’t have to save very much every month to build up a large sum of money when it is time to retire. If you start saving just two dollars a day when you are in your twenties, you will have more than a million dollars when you retire. This growth is possible because the interest compounds over the many years that you work. And once you start saving, be sure never to withdraw any of the money before retirement time.

If you follow these suggestions, you will be a lot less likely to need to file bankruptcy when times get tough.