When facing challenging times, from a global recession to a pandemic, it is easy to feel overwhelmed, particularly when it comes to finances. Yet there are some simple tips for everyone, whatever your situation, that can help you manage your budget so that you can continue to pay your bills, save money and keep to your financial goals.
Always remember that you are not alone and there are resources to help you during a world crisis. Lenders and creditors can help with payment holidays or freeze interest on payments. Utility companies can guarantee water and electricity will not be cut and eviction orders may be lifted. Look into what is available now for help should you become unable to pay your rent or mortgage one month, so you know in advance where to turn if you need to. Landlords and banks can be helpful and understanding, helping you protect your assets.
Know Your Budget
You need to know where your money is being spent, so you can see where you can cut back if required. You can create a spreadsheet or use an app to write your annual and monthly forecast of when things are due to include additional spends like school holidays, anniversaries etc. even if you have to estimate the figures in the first instance.
All annual spends should be divided by 12 to give a monthly savings target for each, such as If you have a big event in the year, such as needing to buy silver anniversary gifts for yourselves or your parents, incorporate that into your budget for the year. Responsible spending during a world crisis does not mean that you cannot treat yourselves or those close to you.
Have Emergency Savings
In an ideal world, each of us should have some emergency savings to deal with an immediate crisis without having to use a credit card. Whilst paying down debt, also build up an emergency fund. Experts generally suggest having three to six months of savings. This is not possible for many people, but it is never too late to start saving and every pound saved is a pound you will not need to borrow.
Look at your budget and see what you can cut back on so that you have a cash pot for emergencies. Are there items you can sell online? Can you work overtime? Can you sign up for cheaper utilities?
At the same time, it is vital that you maintain and manage your credit if you are using your credit card more or taking out a bridging loan. Maintain an excellent payment history and try to keep borrowing as low as possible as you balance payments to your car loan, credit card, student loan, mortgage or other credit products.
Keep on Learning How to Manage Your Money
During a world crisis, information about managing money is more clearly available. Learn as much as you can to make the best of the resources you have and find out what additional help there is for you to become more financially stable and resilient in future. For example, you may be able to find free services or be able to apply for government support.
Avoid High-Cost Borrowing
Ignore the relentless advertising and do not borrow on a high-interest credit card, do not use payday loans with astronomical interest rates and do not withdraw retirement funds. The reason being is that they can often leave you in a worse position than you started thanks to fees and interest and with retirement funds steep taxes.