Coming off from a very challenging year, one of your top goals for the year could be finding ways to protect your finances. You could have depleted your savings as you tried and navigated your way through the health crisis. It is also possible that you are now under an enormous amount of financial stress due to crushing debt payments.
This normally happens when you find yourself without any cushion fund to dip into while facing emergency situations. Just like what the pandemic brought in the past year. A lot of people are still feeling the effects of that crisis even up to this day. Many people are still trying to augment this income or get their business back up and running.
You could have made some headway in getting back on track that is why your goal at the moment is to protect your finances from falling deeper into the red. As you try and rebuild your finances, it pays to be on the lookout for missteps that can make your journey a lot more challenging. The past year was already grueling enough and mistakes could put you back in square one.
If you are serious about your efforts to manage your finances better this year, there are a few tips to consider to help you reach your goal. Here are some of them worth taking a look at.
Watch out for scams
Scams never go away, they just evolve. And this time around, there are some who are trying to fool people under the guise of trying to help. There are scammers who are trying to offer COVID testing and even vaccine over the phone in an attempt to get you to pay for it according to the FCC. There are even scams that revolve around contact tracing. The approach is usually the same where they try to scare you first in an attempt to lower your guard and then they ask for payment.
With a lot of Americans choosing to stay at home, it drove up online transactions. Not only in checking and managing bank accounts but buying basic needs as well. This makes it all the more important to be on the lookout for online scams. One of them is called a phishing scam. A lot of people have fallen victim to this scam.
This is where thieves would pose as a legitimate online portal. They can look like your bank’s online banking page or other financial institutions. Once you put in your log-in details, they would proceed to go into your account and do a lot of damage. They can wipe away your savings or even charge multiple purchases under your account.
Navigate away from high-interest loans
To help you protect your finances better this year, it is essential that you try and stay away from high-interest loans. Usually, these are the types that would have a quick approval process which makes them even more appealing when you are in a difficult situation. The problem starts when you are unable to meet your payments.
The high interest usually comes with hefty fines and penalties as well. Once you fail to make payments, the succeeding amounts can put you deeper into financial trouble. Even if you are able to make the minimum payments, it would take you a long time to pay it off. One perfect example of this is your credit cards.
There might be times where you find yourself tempted to simply swipe your credit card to get the things you want. One tip to help you manage this impulsive behavior is to hold off on the purchase and do something else. Let a few days pass and there is a good chance that you will forget about it. You need to be on the lookout for how you use your credit card because when left unpaid, it can wreak havoc on your finances.
Identify other sources of income
A big part of trying to protect your finances is making sure you have the money to cover all your needs. That being said, it is a good idea to diversify your income sources. This helps you sustain the money coming in even if one of your sources suddenly stops. One of the ways to help you do this is to look into an income-positive hobby. The Entrepreneur even shares that about 45% of the American workforce has a side hustle.
What this does is help you earn a side hustle doing an activity that you already love doing. If you have a talent for writing, there are a lot of online writing jobs you can apply for which you can work on at home in your free time. If you have a talent for cooking delicious meals, why not offer to prepare weekly meals for other people. You get to cook, help other people, and earn from it as well.
Clearly define your S.M.A.R.T. goals
A big part of helping you protect and manage your finances is knowing where you want to be in the future. You need a clear-cut direction so you can be guided when making financial decisions as you move forward. When crafting your goals, it helps to consider the acronym S.M.A.R.T. It stands for Specific, Measurable, Attainable, Realistic, and Timebound.
You need to set specific goals to help you clearly define what you want to achieve. They need to be measurable and attainable as well. You need to be realistic with your goals because you stand to lose interest when you set unreachable goals. Finally, they need to be timebound. Your goals need to have a due date because, without it, they remain to be dreams.
Putting a date on your goals helps push you forward. The deadline helps you to plan ahead and divide the work that you need to accomplish. If your goal is to add $1200 to your emergency fund this year to help protect your finances, then dividing that over 12 months can make it a lot more attainable. That comes down to $100 a month or putting aside $25 every week for your reserve funds.
Protect your finances by keeping healthy
One of the realizations that people got from the health crisis is the value of keeping a healthy mind and body. Though the virus affected everyone in its path, staying healthy can reduce the effects of most types of sickness. Not only that, but it also gives you the chance to enjoy life better when you are on top of your health.
Your health is not just about putting in a lot of time for exercise. It actually starts from the food you eat. What you give your body determines how well your body functions throughout the day. Exercising helps strengthen your body and keeps you in shape. Though your health should not only be limited to physical improvement.
You need to consider your mental health as well. During the pandemic, a lot of people had to struggle mentally being forced into difficult situations. This could result in anxiety and depression which if left untreated, could do a lot of damage. Each person goes through mental problems differently that is why solving them is a personal approach. It helps to reach out to people you trust or even professionals just to get an idea of how to move forward.
Do not be afraid to ask for help
It is important that you be open to seeking help when you need it. Not only for your mental health but even for your financial challenges. There are professionals who can give you a different perspective on your financial plans and how you can reach them faster or simply stay on track. They can also help you choose how to manage your debt problems so you do not fall into a debt spiral.
The effects of the health crisis could prompt you to protect your finances more to stay on top of payments and expenses. There are a number of ways to do this but you always remember to consider your financial situation first.