All your life you have been told that finance is complex, and managing money is better handled by professional accountants or managers. That is as far from the truth as possible.
Life can become a whole lot simpler when your finances are in order, and you can teach yourself to do it. A well sorted out financial plan cannot be stressed enough in the post-pandemic world where so many people are struggling to find decent work and having a hard time making ends meet.
Even if you didn’t lose your job this time around, living from paycheck to paycheck is tough anyway. In my career as a financial coach, I’ve met many people who fall into high-income brackets but still struggle to afford a life they truly desire.
If you’re in the same boat, then don’t stress over it. A lot of Americans have probably never had sound money management advice in their life. And when the pandemic struck, not many had a solid contingency or fallback plan. Very few people have side hustles that can earn significant passive income, and most people found that they were too dependent on the primary breadwinner in the family.
The economy is still going down, and so many of us need money management guidance. I’ve seen people who refrain from getting it because it’s too expensive to hire a financial advisor, while some just don’t find the time to make the right decision. In 2020, you can no longer afford to do that.
Don’t worry if you aren’t a finance whizz or if playing with numbers isn’t your forte. You can still be good at budgeting, saving, and planning, by adopting a few simple approaches.
For the most part, the only technical knowledge you’ll need is basic addition, subtraction, multiplication, and division. Not happy doing so much math? I can help you through it. (LINK HERE)
Here are 3 simple money management tips that can help you recover lost income and put you back on track.
Other than managing money effectively, having a budget to cover unexpected expenses is the starting point for financial stability.
More often than not, you’ll be faced with unexpected spending decisions. This could be a medical emergency or something as simple as a friend/colleague/relative asking for a helping hand. So, it’s better to maintain an allocation for such situations, particularly if you have a monthly budget surplus and not a deficit (a case of expenses exceeding the income).
Think of medical bills and emergencies, insurance bills, pet bills, car repairs, family assistance, or sudden unemployment. A defined budget is useful in deciding how much money you can cough up. So, start by investing time in thinking about how much you earn, spend, and save so that you can plan ahead effectively.
It may sound simple, but a lot of people just don’t do this. According to a survey by FlexJobs and Prudential, 46% of Americans cannot live on their emergency funds for more than 3 months. That’s not a number to be proud of.
Granted that listing down all expenses (housing, food, and grocery, childcare, transportation/vehicular maintenance, insurance, medical, etc.), crunching the numbers, and making sure that everything adds up can feel like an unpleasant chore. However, this is where you need to knuckle down, especially if you have a history of poor money management.
The key is to not focus on the tediousness of the job. Think of the value that proper budgeting - and especially emergency budgeting - is likely to add to your life. All you have to do is put in a few hours each month to list down the recurring expenses, project the amount you’re likely to spend to cover those expenses and the expected savings that you can put into your coffers.
Your finances may not get transformed overnight as a result of this but it’s a good starting point to getting on track. Feeling bogged down with all the extra work? Get in touch with me and I can prepare a customized emergency fund to keep you covered.
Always keep a track of your spending, especially the smaller and seemingly meaningless purchases. They tend to add up and are often the reason that people overspend. So, just keep an eye out for this.
With the lockdown and social distancing protocols coming into effect, many people realized how frivolous certain expenses and activities were. At the end of a random month, if you had a good look at your bank statement, you may feel you overspent on morning coffees, big sales, extra candy bars, and ice cream hangouts.
When you keep proper track of your outflows, you’ll find out where the money is being overspent unknowingly. Once these avenues have been identified, the hard part for you will be deciding which of these unnecessary expenses can be cut down.
This impulsive buying can have a deep impact on your financial well-being in the long run. So, learn to tweak your buying habits and prepare for tougher times ahead. If you are unable to retain your full-time job, these are the holes in your account that you want to fill in first.
During the ongoing crisis, most Americans are finding it hard to pay back the debt. If you have also recently lost your job, or feel financially insecure due to the current economic conditions, it’s best to just focus on low priority debts for now. Make the minimum payment, as long as it doesn’t cost you too much in terms of interest. It won’t harm your credit score if you are making regular payments, but it will ease out the pressure for you temporarily.
You can also ask your lenders if they offer lower interest rates, even if it is a temporary offer. Skipped payments and other payment modifications can be requested and many service providers will work with you during this financial crunch to accommodate your needs.
While this may seem like a never-ending ordeal that is taking its time to leave, it’s not something we haven’t fought with before. We have been through recessions before and we make it through this time around too! Remember to boost your savings, and to be prepared for times ahead. Help yourself with each dollar you invest in your future, as well as that of others around you, and help create a more powerful economy!
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