More than ever, you need to handle money matters very carefully especially if you are just starting out with living on your own. You could be coming out of college in the past few years and trying to hold down your first job. If you still have regular work at the moment, that is already a big thing considering how the pandemic has affected millions of jobs across the country.
This makes financial management more challenging than ever before. No one alive has ever experienced a pandemic subjecting society to the extreme stress test. Your biggest concern at the moment is making sure you stay away from the virus. Your health is still your priority at the moment but you also have to simultaneously juggle your finances.
What makes this a lot more challenging could be the fact that you are just on your way up. You might think that this an unfair advantage and at times, it would feel like it. This makes it all the more difficult to handle money matters are a young age. But you need to know your age is also a great advantage you have over this situation.
As you struggle through the pandemic, here are a few things to help you manage your finances through this health crisis.
Spending more than you need could be your ego talking
A lot of your challenges when you are trying to handle money matters at a young age during the pandemic are your expenses. To find out, you need to make sure you have a comprehensive household budget. Regardless if you are still living on your own without a family, you still need to put together a budget.
This financial tool will help you identify where your problem areas are. If you determine that your expenses are too much for your income, it could be a case of your ego making things harder than they should be. There are times when you begin to spend more than what you actually need to. It could be the case of trying to project a certain lifestyle or trying to keep up with people around you.
Time is on your side when it comes to wealth building. But you need to make smart decisions in order to reach your goals. You need to buy clothes but do you really need expensive ones just to keep up with the people around you? There is a need for investing in computers now as a lot of people work from home. But you do not have to start off with the most expensive model of computer. Start off with what you need and build from there.
Relationships and finances are intertwined
You might not realize it but when you are trying to handle money matters at a young age, the relationships you get into matters. Forming relationships with other people is inevitable. From friendships to romantic relationships, you will have a lot of them along the way. It is important that you know the role of your finances in each of your relationships.
When it comes to your friends, it is important that you do not feel the need to show off. If you feel the need to spend more than what you need just to keep, you might be in the wrong crowd. When it comes to romantic relationships, you need to be able to bring out the best in each other. If it is the other way around even with your finances, you might need to re-assess the relationship.
It helps to talk about your finances while you are still dating. If marriage is already on the table, it is important to talk about money matters before tying the knot. You need to make sure that you complement each other even with your finances. It helps to keep in mind that financial arguments is one of the leading causes of marital disputes in the country.
Handle money matters with a proactive approach
The best chance of surviving an open heart surgery is not needing one in the first place. In the same way as the best way to avoid debt is avoiding it from the beginning. Yes, it is easier said than done especially with the health crisis affecting a lot of consumers. Not to mention that you might not have the tenure you need to feel secure in your job.
But there are ways to help you curb your expenses to try and prevent landing in debt. One approach is having a clear divide between your wants and needs. This can be a problem as Business Insider explains how lavish items form a big part if the American culture. As mentioned earlier where you might spend more because of ego, it could also be about your wants. There could be times where you buy food to eat but choosing the expensive ones just to boast on social media is not a wise decision. This can bring you closer to debt.
One thing you have going while you are still young is that you have plenty of time to save money. This is if you build up the habit early on. Even with the health crisis, you need to save for your emergency fund. This is true especially if you still have regular work to speak of. Make sure you set aside money you will need in case your income takes a dive in the future.
Taking out high-interest loans early on
If you want to handle money matters the right way while you are still young, it helps to stay away from high-interest loans. When you hear about this, you might start to think about your credit cards. But they are not the only ones you need to stay away from. Personal loans and even payday loans are some of the debt accounts which charges high-interests on the amounts you borrow.
The main reason why they need to charge high-interest is that they are unsecured loans. As a result, they need to make up for the risk they are taking by charging higher interest on the amount you are borrowing. This is the reason why your mortgage and even car loan would have lower rates. It is because your lender can take back the asset tied on the loan if you default on your payments.
This is not to say that you should not use credit cards as you manage your finances. Remember that these cards are merely financial tools. If you use them correctly, they can even help you improve your money management skills. Take advantage of credit card rewards, 0% rate for debt consolidation, or simply using specific cards for certain expenses to help you budget your money.
Making emotional money decisions
CNBC shares that people have the tendency to be emotional when it comes to money decisions rather than being rational. One thing that can help is to go back to basics when you are faced with money decisions. It also helps if you always keep in mind what your priorities are to help you make better decisions.
It might seem daunting when you try and handle money matters at a young age and at this time with the pandemic. But remember that it is not impossible and that the best person who can help you is you. Make small steps and create healthy money habits so you can start to be more independent in financial management.