Financial planning and budgeting is never an easy task, and even those who plan ahead can be caught off guard by unforeseen expenses.

Ask yourself what would happen if you lost your job or primary income stream. Could you cut back on your spending enough to make ends meet, and would you be capable of covering your expenses over a long duration? If your answer is no, chances are you are spending beyond your means and not saving enough.

Many people tend to spend most of what they earn, and take on financial liabilities that will burden them well into their financial future. Some examples include mortgage, long term rental agreements, vehicle financing, student loans, and even something as simple as a cell phone contract can make the difference between saving money and taking on debt. These decisions will have a direct effect on your ability to retire later in life.

Liabilities are more common among Millennials who are college educated, raising questions about whether or not a college degree is an automatic ticket to a better financial future. PwC analysis found that 31% of all Millennials, and 44% of college-educated Millennials, carry more than one source of outstanding long-term debt. According to the Federal Reserve, total student loan balances at the end of March 2015 were reported as $1.27 trillion. That isn’t the only debt which is burdening this generation, a report on points out that as of 2013, a person born between 1980 and 1984 had on average $5,689 more in credit card debt than his or her parents at the same stage of life and $8,156 more in credit card debt than his or her grandparents.

Even people who are well prepared for retirement can find themselves having trouble making ends meet. They don’t take the unexpected into account, and before they know it what they thought was a great pension isn’t enough to cover basic living expenses. Poorly managed pension plans can lose significant value, and the beneficiaries have their retirement benefits cut. Sometimes workers don’t get the severance package they were expecting, which abruptly changes their financial outlook. Retired workers who are overly reliant on pension and severance payouts may find themselves forced to take on debt, or go back to work in order to cover unexpected/underestimated expenses.

According to the Congressional Budget Office, the 2008 financial crisis wiped out 2 trillion dollars worth of American’s retirement savings, and the value of pension funds fell by approximately 1 trillion dollars. It just goes to show that you must expect the unexpected when it comes to safeguarding your retirement. But how many people haven’t made any plans for retirement? In  a report by US Government Accountability Analysis, of all households with members aged 55 or older, nearly 29 percent have neither retirement savings nor a traditional pension plan. Not only does this lack of planning have an impact on them personally, but also places a tremendous strain on the rest of society; forcing them to cover social security costs for these people.

The lesson is simple, instead of spending more when times are good and you have excess disposable income, start thinking about what you will need to do when times get tough. It’s never too late to begin preparing for your future.