With the U.S. economy in turmoil, it’s more important than ever to prioritize wise, effective money management. Even if we have not been directly impacted financially by the pandemic, be it through job loss, cut hours, or lost investments, the financial world is changing. The economy is struggling. We don’t know what the future will bring and our financial preparedness is paramount!
Crises aren’t the only time to prepare for financial trouble. If anything, we should make — and keep — these habits through both good and bad seasons.
5 Key Tips on Money Management During Tough Times
1) Prioritize Credit Management
With many struggling financially this year, credit lenders are growing more strict with their terms and conditions. You may find that lending of all kinds is experiencing a shift. It’s harder to get approved for loans and credit card companies are reducing lines of available credit. Not only is this a big obstacle for those who need lending approval, but it means that we need to manage our credit even more diligently than before.
A good credit score goes a long way — and it’s difficult to build back up. Make sure you’re paying off your balance and not missing any payments along the way. Protect your credit to ensure that you don’t run into any problems when looking for lending down the line.
2) Focus on the Right Things
The pandemic has created a lot of stress, anxiety, and frustration among the average consumer. As a result, it’s more tempting than ever to put your money towards creature comforts and a hit of dopamine to the system. However, spending on unnecessary meals out and shopping isn’t going to make you feel better in the long-run. Don’t fall into the temptation to make frivolous spending choices! Even if spending money gives you a temporary high, it doesn’t last — and it will strain your budget.
Focus on the right things. Delay gratification and trade it for financial stability and security. While indulging here and there isn’t necessarily a bad thing, making a habit of spending extra money to feel better is a dangerous road to go down!
Instead, identify those optional costs and impulse purchases so that you can reign them in. Be the guy who says no, we won’t eat out, because we already spent money on groceries at home!
3) Monitor Your Budget
Changing times call for a changing budget. Be more conscious of where your money goes than ever during these uncertain economic times. You may find that you’re spending less in some areas ( say, transportation, entertainment, etc.) and more in others ( such as childcare ). Adjust your budget to fit where you are now, with special priority on cutting expenses and saving where you can.
Pay attention to those “optional” expenses and direct them towards savings and necessary costs. If you’re not paying attention to your budget, you can spend that money anyway without realizing it!
4) Save for the Unexpected
I’ve talked about some of the dismal statistics around Americans and their savings accounts before. Savings are important not only for retirement but for dealing with the unexpected. We never know when a car might break down, an accident may happen, or someone ends up in the hospital — especially now. Prioritize trimming the fat in your budget and putting it towards savings. If debts are preventing you from saving, it’s time to make a game plan. Plan how you’re going to eliminate that debt so that you can redirect your energy to building up savings and emergency funds.
5) Revisit Insurance Policies
As we’ve seen our lives and priorities shift over the past several months (with no end in sight), it’s wise to revisit insurance policies. While we’re driving less, perhaps it’s time to adjust or renegotiate car insurance policies. Health concerns top-of-mind? Look into better or more balanced policies that suit your medical needs.
There are other options out there — don’t be afraid to branch out to get better, more comprehensive coverage and preferable rates. Doing your research is key to getting the best deal.
How are you preparing for your best financial future? Share your strategies in the comments.