We are living in times that aren’t exactly reeking of financial stability. As soon as we started dealing with the ripples of the COVID-19 pandemic new medical emergencies and the ongoing European crisis are threatening to once again push the world completely off the rails. Speaking in terms of personal finances all these things signal only one thing – more financial uncertainty in years to come.
Still, we shouldn’t simply give up and surrender ourselves to the currents. Here are a couple of tips that should help you make sense of this mess and face any financial obstacle with a tight budget.
Review the expenses and set up a budget
Seriously, you can’t hope to keep the finances under control if you don’t know where your money is leaking. So, review all the fixed monthly expenses and try to keep a record of all the money you are spending down the road. Once you have a general impression of the funds you need to get to the end of the month, you can start setting up your budget. We suggest that you split your monthly after-tax income into these three groups:
- Needs (50%) – These are the necessary expenses like rent, utilities, repairs, etc.
- Wants (30%) – Things you enjoy but aren’t necessary for seamless living
- Savings (20%) – The funds you will put aside for the more difficult time
Start investing your money
As we can see, about 20% of your monthly earnings should be put aside. We would, however, like to point out that there are a lot of more productive ways to use these funds than simply living them sit on the savings account. Try using a portion of this money to make safe beginner-friendly investments. Some of the most popular options you have on the table are as follows:
- High-yield savings accounts
- Certificates of deposits
- Mutual funds
- Individual stocks
It is highly recommended to keep your investments diversified and combine several of these options. Also, it is always a good option to invest in your education.
Explore the short-term loan options
These things present an excellent way to remove immediate financial obstacles, fix budget holes, consolidate debts or make necessary big purchases without having to burden your personal finances with long-term and high-interest loans. These loans can also be used to improve your overall credit score. If you are, for instance, living in Australia you can easily get a loan from Jacaranda Finance even if you don’t have a perfect credit history and start making amends with traditional financial institutions. New options like this one pop up all around the world with each passing day.
Start living below your means
In short, the fact you can spend 30% of your earnings on the things you enjoy doesn’t mean you should spend every single dime on the things you like. What’s even better is that you can make considerable savings and develop positive money consciousness even if you don’t sacrifice too many things you like. So, if you are shopping for clothes, spend some time checking out the discounts in other stores. If you are streaming services, see if some of the vendors offer discounts for bundled packages. Buying used items will give you access to premium brands way below their market price. The opportunities for such saves are truly endless.
Pay off the existing debts as soon as possible
Last but not least, we would like to remind you, once more, that the period ahead of us will be very uncertain. With the things as they are, the last thing you want is to face these financial challenges with debts hanging around your neck. That is why you should put absolute priority on getting a clear financial slate as soon as possible. One of the options you have at your disposal is to leverage the short-term loans as we mentioned in one of the previous passages. Another is that, for the time ditch the savings plans and use this portion of your budget for the quick debt repayment.
We hope these few tips gave you a general idea about the strategies you can to bring some order into your personal finances or even inspired you to come up with some the fresh approaches of your own. The most important thing, however, is to start doing something in this regard as soon as possible. According to all relevant indicators, we have a very rough period ahead of us. You need to do your best to face these challenges well prepared and fully stocked.