The Covid-19 pandemic has caused stress to many people’s financial situation. It is times like these that remind us of the necessity of financial planning and risk management. Money management is one of the many essential skills that are not taught to us in schools.
So let us look at ten tips to improve your current financial situation.
- Pay Yourself First - One of the first lessons of financial literacy is that ‘A part of what you earn is yours to keep.’ The moment you receive your paycheck, the first thing you should do transfers at least 10% of your income to your investing fund.
- Pay Off All Debt - Being caught up in a debt trap is the worst thing you can do to your financial health. If you have any outstanding loans that you are paying interest on, focus on delivering them as soon as possible, even if it means reducing your expenses for a few months.
- Fixed Expenses Are Not Fixed - If you have multiple fixed costs like rent, electricity, etc. They eat up a considerable part of your income; you must realize that these so-called fixed expenses are not fixed and can be changed. If you feel like you are spending too much on rent, look for better deals. Sometimes the solutions to our problems are more straightforward than we think.
- Sell Unused Assets - We all have things that we purchased in the past but do not use anymore. It is often a great exercise to sell that stuff and convert it to cash. This money can then be invested, and instead of the asset getting depreciated, you will now start earning interest on it.
- Track Your Expenses - Use an expense tracking app to understand where your money is going so that you can start to take action on unnecessary costs.
- Go Green - Adopting environmentally sustainable practices like switching to LED bulbs and taking a bicycle ride or public transport to work can also help you with your finances a lot.
- Make a Budget - A budget is a simple financial planning tool that helps you manage your income and expenses better. Money management is much easier when you have written down financial planning in the form of a budget.
- Find a Side Hustle - Depending on a single source of income can be risky. If you have a skill or hobby that can also earn you an extra buck, it is always good to explore that opportunity.
- Shop for the Month - If you can plan and make a list of all the utilities and supplies you will need for the month (except for stuff like fruits, vegetables, etc.), then it is a great idea to buy them in one go and not visit the store often. You will avoid a lot of impulses purchasing this way.
- Avoid Addictions - Avoiding addictive habits as drinking and smoking can also improve your financial health massively. It is not only good for your health but your wallet too.
Our financial health is decided a lot more by our financial planning than by our paycheck. If you understand and learn the basic rules of personal finance, it is only a matter of time before achieving financial freedom.
