Are you worried about your financial future? You should be. The coronavirus pandemic has taken a major toll on the economy, and it doesn’t look like things are going to get better anytime soon. If you’re not prepared for a financial emergency, you could be in for a nasty surprise. That’s why today, we’re going to talk about 8 basic money moves everyone should make during hard times. These tips will help you stay afloat during these tough times and protect your finances long-term!
1. Review Your Budget
The first thing you need to do is take a close look at your budget. Are you spending more than you’re bringing in each month? If so, you need to find ways to cut back on your expenses. Look for areas where you can trim the fat, such as eating out less often or cancelling subscriptions that you don’t use.
2. Cut Back on Nonessential Spending as Much as Possible
Cut back on nonessential spending as much as possible. This is one of the most important things you can do to weather a financial crisis. When your income is uncertain, it’s crucial to cut back on unnecessary expenses so you can make ends meet. If you’re not sure what counts as a nonessential expense, ask yourself this question: can I live without it? If the answer is no, then it’s probably an unnecessary expense.
3. Reevaluate Your Spending on ‘Wants’
The first thing you need to do is reevaluate your spending on ‘wants.’ Just because you can afford something doesn’t mean you should buy it. If you’re trying to save money, you need to be more mindful of your spending. Only purchase items that you truly need and cut back on unnecessary expenses.
4. But Set a Budget for This Discretionary Spending
This may seem like an obvious tip, but you’d be surprised how many people don’t have a budget. If you don’t know how much money you have coming in and going out each month, it’s very difficult to make ends meet. Sit down and figure out what your monthly income is. Then, list out all of your expenses. Make sure to include both fixed expenses (like your rent or mortgage payment) and variable expenses (like food and transportation). Once you have a good idea of where your money is going each month, you can start making adjustments.
5. Try To Decrease Your Spending on ‘Needs,’ Too
One of the best things you can do during hard times is to try to decrease your spending on needs. This may seem like an impossible task, but it’s actually quite easy if you’re willing to make some sacrifices. For example, you can cook at home instead of eating out, take public transportation instead of driving, and shop at discount stores instead of department stores. By decreasing your spending on needs, you’ll free up some extra cash that you can use to cover your other expenses.
6. Review Your Savings
Do you have an emergency fund? If not, now is the time to start one. You should aim to save at least $1000 so that you have something to fall back on if you lose your job or face other financial emergencies.
If you already have an emergency fund, take a look at how much you have saved. Is it enough to cover your expenses for three months or more? If not, you may want to consider increasing your contributions.
Next, take a look at your debts. Do you have any high-interest debt, such as credit card debt? If so, now is the time to start paying it off. The sooner you can get rid of your high-interest debt, the better.
If you don’t have any high-interest debt, that’s great! You’re ahead of the game. But that doesn’t mean you should stop there. Now is also a good time to start paying down your mortgage or other debts so that you can become debt-free even sooner.
7. Prioritize Your Emergency Fund
If you don’t have one, start putting away money each month until you have at least $1000 saved up. This will help you cover unexpected expenses like car repairs or medical bills. And if you lose your job, it will give you a cushion to fall back on while you’re looking for work.
Once you have your emergency fund in place, the next thing you need to do is start paying down your debt. If you have high-interest debt like credit card debt, it’s important to start chipping away at it as soon as possible. The longer you wait, the more interest you’ll accrue, and the harder it will be to get out of debt.
If you’re not sure where to start, try making a list of all your debts from smallest to largest. Then, focus on paying off the smallest debt first. Once that’s paid off, you can move on to the next one. Not only will this help you get out of debt faster, but it will also give you a sense of accomplishment and keep you motivated to keep going.
Another important money move to make during hard times is to start tracking your spending. This can be a difficult task, but it’s so important to know where your money is going each month. Are you spending too much on unnecessary things? Are there areas where you can cut back?
8. Paying Down Debt
This may seem like an obvious move, but it’s one that far too many people overlook. If you’re carrying a lot of debt, it’s going to be very difficult to make ends meet if you suddenly lose your job or have your hours cut back. Paying down your debt will free up more of your income so that you can weather a financial emergency.
These are just a few of the many money moves you should make during hard times. By following these tips, you can protect your finances and weather the storm. Stay safe and stay strong!