As the global pandemic stretches through the second half of the year, one scientist warns that it could last up to 2023.
He could be wrong (hopefully!) but it is better to start handling your finances smartly to survive those long and hard years many of us will surely face.
While it is normal to feel anxiety during uncertain times, there are actions to empower individuals steering through financial situations as they arise.
1. Review Your Budget
Regardless of the current state of the economy, reviewing one’s budget is always a good idea.
Identifying priorities in expenditures is the first step toward establishing a budget that maximizes the use of income and other financial resources.
Individuals who are currently managing their finances without the benefit of a budget should take the time to create one.
Just as an architect would not build a home without a blueprint, individuals should not attempt to control their finances without a budget.
Knowing the importance of having a budget and creating one are two different things. Here are some resources for drafting a financial outline:
- Download a free budget worksheet from the Federal Trade Commission (FTC). It will help balance expenditures with revenue and identify areas of excess when trimming is in order. There are other budgeting tools consumers can use. Not all of them are free.
- Prioritize expenses if a loss of income or unplanned expenses are a concern. This is crucial if there is not a savings account or emergency funding to fall back on when needed. Essentials like food and shelter are obligatory items in any budget and take precedent. Ruthlessly eliminate any frivolous expenditures.
- Plan a debt repayment strategy. There are two methods: paying extra toward the debt with the highest interest rate or paying extra toward debts with the lowest balances to wipe them out quickly. Refinancing, especially if student loans and mortgages are part of the budget, is a great debt repayment strategy.
2. Increase Your Financial Knowledge
Setting a budget is important especially if you’re a single mom. But there is more to managing finances.
Increasing one’s financial knowledge is a gift that keeps on giving. Financial professionals take courses that prepare them to manage the assets of their clients.
Building a strong foundation in economic and financial skills is not exclusive to financial professionals. They are proficiencies that also come in handy in managing personal finances.
Educating oneself on the nuances of budgeting, financial investment, and financial resources is a worthwhile endeavor.
The knowledge learned applies to personal financing but may someday come in handy in pursuing a new career path should the opportunity present itself.
3. Monitor Your Credit
Creditworthiness is not just about securing a great mortgage rate or approval for a new car loan. Individuals with stellar credit ratings can live easier and less expensively.
Payment history, credit history length, credit use, and credit mix are factors in determining a credit rating.
Consumer credit reports are free to access once annually.
4. Invest Wisely
Saving for retirement is a priority in every budget. While some put it off until they are closer to retirement age, developing an investment strategy early is beneficial.
Lower risk options help protect against market fluctuations and are ideal for investors who start planning early for retirement.
Understanding all investment options and strategies will help turn budgeted monies into tidy nest eggs for the future.
Navigating one’s finances is challenging, even when not in a global pandemic. Maintaining financial health and security is paramount.
Investing time in ensuring your finances are in good standing order requires nothing more than a bit of time.
And, right now, people seem to have a lot more time than money on their hands.