It takes a crisis and financial volatility for people to reevaluate their lifestyle and spending habits. When people lose jobs and businesses close their doors, the fear soon starts to creep in. A financial crisis is something that you should take seriously because it affects everyone. The severity of its impact will depend on how financially ready and healthy you are.
Your financial health is important and should not be taken for granted. If you are not careful and responsible with your finances, you may soon need the services of bankruptcy attorneys to help you settle your debts.
Some Simple Hacks for Your Finances
These hacks may sound simple and practical, but not many people do them. If you want to improve your financial health, start by taking control of your spending habits.
1. Make a list before you leave groceries.
Going to the grocery store without a list is a recipe for overspending. Carefully think over what you really need to buy. Go through the stocks that you have, and list only those that are needed.
2. Leave your credit card and bring large bills.
Bringing your credit cards everywhere makes you prey for impulsive purchases. Leave them at home if you have no purchases that need them. Then carry with you some bills in larger denominations. Larger denomination bills are harder to break down, so you won’t be inclined to make those small purchases. What makes small purchases dangerous is that you may end buying more than what is needed because they are cheap.
3. Do not save your credit cards in online stores.
It cannot be denied that online shopping is convenient, especially today with a global pandemic. Online stores are finding ways to make shopping even more hassle-free for you by allowing you to enroll and save your payment details. The downside to this is, the easier the payment method is, the easier it is for you to fall into the trap of impulse buying. Avoid one-click purchases and delete your credit card information. By having to enter all your payment details, you create a barrier that will likely stop you from making that purchase.
4. Use a spending app to track your daily spending.
You will never know that you have a problem if you are not aware of it. A spending app is a quick and easy way to track all your expenses, big and small, within the day. It will also let you see where the bulk of your money is going. You can then assess if this is reasonable or not, then make adjustments if necessary.
Once you have started to take charge of your spending habit, it’s now time to take charge of your future.
Secure Your Future
No matter how much you are earning, it is always a good idea to secure your future. You do not have to start big immediately. You can start with small investments that will help you reach your financial goals and provide you with financial security. This is even more important if you have a family that depends on you.
1. Save for an emergency fund.
Before you start with any investment, save first for your emergency fund. Your emergency fund should be at least 6 months of your monthly expenses. This fund should be put in a savings account that you can immediately withdraw in times of emergency. Avoid investing it in high-risk channels that can put your capital at risk. Your emergency fund will give you a financial cushion in unforeseen events such as losing a job, medical emergencies, car repair, and home repair, among others.
2. Take advantage of any increase in earnings.
While it’s true that you should enjoy your earnings, you should also take advantage of it by increasing how much you save or invest. You can allocate 75% of your increase in earnings towards your savings and 25% towards your expenses.
3. Do not forego your retirement.
Saving for your retirement as early as now can help you in the long run. Since you have many years in your investment time frame, you can take advantage of high-interest, high-earning investment products.
4. Invest in private health insurance.
Good for you if your employer offers comprehensive health insurance. However, it will still be to your advantage if you have insurance of your own. For one, you may get fired or quit your job one day. If you strongly believe you will be staying with your company for years, you can review your existing health insurance and buy cover for illnesses not covered. Do not also forget to get life insurance to secure the future of your dependents.
When you invest in securing your future, you are putting your money to good use instead of spending it mindlessly. Once you have covered all the basics, you can start investing your money to grow your capital and even give you passive income in the near future.
