Personal money management tips will come in handy now with all the financial challenges brought by the pandemic. The health crisis forced businesses to close shop putting a lot of employees out of work. This meant a drastic cut in their income. Some people were let go outright, placed on furlough, or given an alternating work schedule.
These scenarios all boiled down to one thing – money management in the coming months will be challenging. Income will go down and a lot would have to rely on unemployment benefits. Pew Research goes on to share that about 68% of Americans either lost their jobs or absorbed a pay cut. This is all because of the health crisis at hand.
As the main focus is keeping healthy and making sure that you stay away from the virus, you also need to pay close attention to your finances. If you are staying at home, this is the perfect time to look at several personal money management tips to help you manage your finances better. You need this now to tide you through this difficult time.
When you begin to look for tips to help you manage your personal finances, you might be overwhelmed with the sheer number of options that can come your way. You need to understand that not all finance tips will work for you. You have to consider your own personal and unique situation to know what will work. Though some tips can apply to a lot of people. Here are some of them worth looking into.
Go through your monthly income
As soon as you start talking about personal money management tips, it is always a good idea to start with your budget. With that, you can divide the job and take a look at your income first. At this point, you need to know that your household budget normally comprises two things – your income and your expenses.
There is no denying the fact that the health crisis has affected a lot of people and their ability to earn. People are being furloughed and let go from their jobs. This drastically reduces the income they can bring home every month. Reduced income is one of the most stressful situations in your professional life and you need to get ahead of this early.
Much like how you put together your budget, you need to take a close and hard look at your income. List down all the sources of funds you have every month and how they are affected by the health crisis. Be sure to include all sources of income from your day job to all your side hustles. You need an accurate representation of your income. This will help you move forward with a solution later on.
Scrutinize every single expense item in your budget
As you move forward with a limited budget, one of the most important personal money management tips is getting a handle on your expenses as well. Remember that your budget consists of your income and expenses. Now that there is a good chance that you are spending a lot of time at home, you might want to use this to go over your expenses.
You must have a real-time understanding of where your money goes. Your expenses are a crucial part of your budget. With the budget that you have, go through your expenses one at a time. With the pandemic changing a lot of daily routines, there is a good chance that your expenses would have gone through changes as well.
Transportation expenses, food costs, and even clothing allowances would all go down since you are just at home. Even if you work from home, all these would not be much of an issue. You do need to make adjustments like in the area of food. You might not be eating out too much but being at home all day could also increase your grocery expenses. The idea is to start taking out unnecessary expenses or reduce some areas to make room for extra funds in your budget.
Adjust your budget accordingly
Personal money management tips include budget adjustment. This is putting together the first two items. Auditing your income and scrutinizing your expenses can give you a better understanding of your household budget. At this time when there are still a lot of uncertainties when it comes to employment, it is important to have a comprehensive household budget.
At this time, you should have a fair amount of information regarding your income and expenses. The general idea is to have your income cover all your expenses with the extra funds going to savings and other future needs. With the health crisis, this is a lot more challenging with people experiencing a considerable drop in their income.
This is the reason why you need to have a clear picture of your budget. If you are still doing great, it is a good strategy to focus on saving for future needs. If your income is starting to fall behind, you can start cutting down on expenses to make more room. For some, identifying and pursuing side gigs can help bring extra money during this difficult time.
Prepare for the long haul
Personal money management tips in the middle of a pandemic should include future preparations. More than your present need to purchase necessities and ensure a steady stream of income, you have to consider situations that may come up in the coming weeks or months. Keep in mind that the country and the whole world is still battling this health crisis.
One of the areas you need to focus on when looking at personal finances is strengthening your emergency fund. A lot of people did not pay a lot of attention to this fund in the past. CNBC shares that at the start of the year, about 37% of people would use a credit card or a personal loan to cover a $1,000 emergency.
If you can, make sure that you putting more into your emergency fund. This will help you get through this pandemic a lot better. Your job situation might change and your income could be affected. One benefit of having a big reserve fund is that it helps you lower down your financial stress as well. During this pandemic, your mental health should also be a top concern.
Fine-tune your investments
Personal money management tips need to include your investments as well. As you look at your future needs, your investments also play a crucial role in this mix. The health crisis affected a lot of industries and businesses and you could see your investments dive as well. This is to be expected but you have to look at the bigger picture.
History has taught people that investments, especially in stocks, tend to go up and down. This means that if you have a knee-jerk reaction and sell all your investments at a loss just to try and salvage what you have, it can hurt you in the long run. If possible, stay with your investments and assess the growth trend. If your investments go down, they tend to go back up again when the economy becomes better. It will also help if you can work with a finance professional to give you pieces of investment advice on your best course of action.
There are a lot of personal money management tips you need to look into to help you navigate your way through this pandemic. Just know that your situation is unique so what might work for some of your family and friends might not have the same effect on you.