Millions of people are still recovering from the economic ramifications of the pandemic. Millennials and younger people are on top of the list; financial hurdles like getting a pay cut and losing insurance are of significant concern.
Whether you fall into that category or not, the uncertainty brought about by the pandemic might leave you worried about your financial stability. How can you manage your finances successfully and stay afloat during a particularly fragile economic period? Consider a few tips to help you avert a financial crisis.
Make a Budget
A budget is a smart way to control your finances; it makes you keep tabs on how much money is coming in and going out each month. A budget allows you to maintain the right mindset to establish long-term financial goals, like purchasing property or saving for emergencies. Without having a budget, you risk living beyond your means.
Manage Your Bills
Bills can come in a wide range of formats; in our day and age, bills can be digital. For example, start cooking at home instead of paying for food delivery on apps. Consider taking the bus instead of an Uber; although the additional expense might seem trivial, it will add up over time. Carefully organizing your bills and payments can make you save. Set a specific date twice a month to review your accounts, a late credit card payment could set you back financially. Don’t miss opportunities to keep track of all your expenses. Scheduling automatic electronic payments is a smart way to ensure they arrive on time.
Pay with Debit Instead of Credit
Although they look identical, debit and credit cards are distinct. They both have digital codes, expiration dates, magnetic strips, and electronic chips. With a simple swipe, you can make purchases online or in-store. The advantage of paying with debit is that it doesn’t charge interest. Since debit card payments take money out of your account right away, you don’t accumulate a balance that you have to pay interest on. This reduces your monthly financial obligations and puts you in a better position to save.
Get Out of Debt
Debt creates more financial burdens than you can ever imagine. Holding too much debt can make you struggle to pay your bills, impacting your credit score and making it more difficult to qualify for loans and mortgages. To get out of debt, you must pay off your expensive debts first; one of the smartest ways is to make minimum payments on your debit and credit cards. Choose a debt that charges you the most interest and focus all your extra payments on paying that off first.
Another smart strategy is to get a consolidation loan. Ask your bank if it can consolidate your debts into one loan with one payment at a lower interest rate. When in doubt, speak with a financial advisor or credit counsellor; they can pinpoint effective debt repayment programs to relieve the stress.
Set Up an Emergency Fund
An emergency fund is the contingency plan you fall back on when your personal finances are at risk. An emergency fund is like a safety net; it protects you in precarious economic times. When planning for an emergency fund, put away three months of living expenses; if that’s not feasible, save some money well in advance. Your family and loved ones will appreciate you doing that in case you are laid off from work or fall sick. Even though it could take a while to reach your goal, the most important thing is to start saving today and every month to get closer to your goal.
Develop a New Skill
If you are struggling to find work or need a second job to pay off additional expenses, try learning a new skill. In our digital age, you can sign up for various online courses to develop your skills. Online learning platforms like edX offer courses in many fields, from computer science to business management, languages, and humanities. You can also get a part-time job on platforms like Upwork and TaskRabbit.
Follow Your Instincts
Managing your finances can be stressful, especially when the world is recovering from a global financial downturn. If your gut tells you that a financial decision is bad, don’t ignore the signs. Ignoring your gut feeling might be tempting, but don’t let that lead you astray. If you are tempted to ignore your bank statements or credit score when you are in a financial rut, fight the urge. Monitoring your credit is an important principle to successfully manage your finances.
David Messiha | Staff Writer
