This year has started with some bad and unpredictable news - the Coronavirus (COVID-19) pandemic absorbed the whole world. And let’s be honest, nobody knows when it’s going to stop. Besides multiple infections and death cases, millions of people lost their jobs and many will keep losing. If you're lucky to have money and/or you’re still working, hurry up and make these 5 next steps.
1. Create a budget.
For most people going on a budget is associated with giving up all the comfort things, you’ve been surrounded by for so long. You think that you have to stop ordering food from your favorite Italian restaurant or buying expensive clothing online. That’s true, now you have to tighten up your expenses and prioritize more important things. The main rule is to take care of things before anything bad happens:
- Budget before a month begins: think ahead, and you’ll get ahead with life and money.
- Identify your income.
- Enter your fixed expenses - whatever you pay every month, no matter what. For example, your rent or mortgage payment.
- Now enter your typical monthly expenses. Those can be the bills that can change based on usage each month, like electricity or gas. Then add in your discretionary expenses—the nonessential stuff - cable, groceries, and restaurants.
- Be specific each upcoming month. Let’s say, you have a son’s birthday next month - budget for the celebration and gifts in advance!
- Budget for your money goals long-term. Think about where you want to be financially in 5, 10, or 15 years.
- Use a zero-based budget rule. Make every money move a use. If there is still money left put it towards your long-term goals.
2. Track your spending.
You cannot just set your budget and let it be. Simply track your expenses, especially now. Besides obvious Microsoft Excel, there are many other free Apps for tracking your expenses and easy budgeting. Mint is been one of the leading Apps and is still pretty popular among smart budgeters. Tracking your spending will not only show how much money is left till the next paycheck but also your spending habits. It also helps to analyze where you've been impractical with your money and will help you to avoid unnecessary spending in the future.
3. Alter your budget monthly.
The key to being a successful budgeter is to practice adjusting your budget throughout the month. Check which bill is higher this month or where exactly you spent extra so you can note it for the next month. Did you order extra meals in your favorite restaurant last month? Not a necessity, you can replace this habit by buying regular groceries.
4. Save for large or emergency expenses.
Unpredictables happen - we have already seen the proof of it lately. Being fully armed will keep you calm and confident. If you're lucky enough to still have a job, start by saving at least $1,000 in your emergency fund. Eventually, you’ll want to have three to six months' worth of expenses set aside in your emergency fund. But ideally, keep it between six to twelve months.
5. Reduce the amount of debt you owe.
What if all those expenses are not a big problem comparable to the debt you are drowning in and no longer able to pay? We at Financial Rescue LLC can help you with our debt relief solutions. We will help you settle your debts, cut down the total amount you owe, and consolidate your debts into a single low payment. This is your chance to take on your debt and start building your savings! Contact us today.