Financial security is more important now than ever. Millions of people globally have lost their jobs due to COVID-19 pandemic. Unemployment rates are increasing and jobs have become almost impossible to get. This unexpected crisis has left many facing financial challenges or fearful of their financial future. You may be wishing you had a savings or more money in your savings to fall back on. However, it’s not too late to get your finances in order and improve your savings.
There are several steps to do so. Identifying the financial challenges you’re faced with is important before attempting to undertake these strategies. Decreased income or unemployment, a newborn, accident, addiction, new home, and retirement are some common reasons for financial difficulties. No matter the issue, there are effective steps to improve your finances.
1)Maintain a balance between income and expenses
The number one rule to saving and limiting financial challenges is to ensure your expenditure isn’t higher than your income. In other words, do not spend more money than you make. This may mean cutting back on some things and making smarter decisions when spending. This is the most basic way to avoid overspending and debt.
2)Create a Budget
Budgets are important tools to help you save money. However, many people do not budget because it is seen as too time-consuming and restricting. The benefits of budgeting definitely outweigh these so why not budget? Budgets help you to understand your financial limitations. Better understanding will lead to smarter decision-making. Budgets help to prevent overspending by outlining incomes and expenses. This will help you to make better decisions when spending.
Budgeting helps you to keep track of your money. Budgets are like windows to help you look into the future and prepare for it. By outlining your expenses and incomes, you will be better able to save, invest, prepare for emergencies, and pay off debts.
Prioritizing is another way to help you keep track of your money and make the best decisions. Setting priorities means deciding between what you want and what you need. Logically your needs should come first. Food, water, shelter, and clothing are basic amenities. Also, electricity and amenities for extreme weather are needed. Make sure these are covered before doing any unnecessary spending.
It can be helpful to create a list of these expenses. This will help you meet your basic needs, keep a good credit score, and decrease financial stress.
4)Find cheaper alternatives
There are some things you feel you just can’t do without. It’s only human to spend money on things you love that make you happy. But have you considered cheaper alternatives? It’s common to purchase things solely because of the brand. Popular and high-end brands are usually more expensive than other brands that make similar products. These products are usually of the same or similar quality. It’s best to go for cheaper options as long as the quality is good.
Find cheaper alternatives for appliances, food, clothes, hygiene products, and cleaning supplies to help you save money. It is important to do research to help you find the best prices.
Bundling has become one of the most popular ways to save. Most product providers offer bundle or combo deals as a way to help consumers save money. For example, it’s cheaper to buy a burger, fries, and drinks as a combo than to buy each item singularly. Retail stores, internet service providers, and comprehensive car insurance companies typically offer bundle deals. Some insurance companies offer discounts if you purchase more than one type of insurance or insure multiple items with them. Bundling is joining products and selling them as one which works out cheaper than selling them separately. Opting for bundle deals will lower your expenses and leave more money to save or cover debts.
6)Choose cash over card
Society is becoming more and more paperless and cashless. It’s quite convenient to make purchases anywhere, anytime by just using a card. While this is good, it also helps to develop bad spending habits. Oftentimes not having enough money on you or having to physically go and make a purchase stops you from spending unnecessarily. Credit and debit cards make spending easier but they also make it easier for you to fall into debt or a cycle of wasting money. Using cash makes it easier for you to track your money, therefore, easier for you to save.
7)Keep an emergency fund
If 2020 has taught one thing, it’s that life is unpredictable so it’s important to be financially prepared for the future. Having an emergency fund will help to offset unexpected expenses without leaving you in debt. No matter how small your income is, saving even a few dollars each time you receive money can add up to big savings over time. You can visit your bank or credit union and discuss plans to help you manage your finances and save.