Want to make more of your finances – here’s how to get them under control and in order.
- Make “Survival” Expenses A Priority
Emergencies and unexpected events can send your life and especially finances into turmoil, causing you to forget even the most basic needs. Whatever your current situation is, the three basic needs (food, shelter, clothing) and water should top your budget and be paid for before anything else can come into the picture. It is after these have been taken care of that other important or survival expenses can follow. Survival expenses can be defined as expenditures directly linked to your ability to generate income. Good examples of survival expenses are car repair costs (if you need the car to work) and childcare. If failure to have your car repaired or stopping childcare support could affect your ability to generate an income, it then qualifies as a survival expense.
You also don’t want to cut your prescription and other medical expenses as well. This is particularly important if on specialized care and need specific medication or prescriptions for the same. While medical bills are important, talking to your provider to see if they can arrange for a more manageable plan can help too.
- Eliminate Non-Essential Expenses
Commonly known as luxury expenses, these are the things/expenses you can do without. These include entertainment, road trips, a trip to movie theaters, and high-end food items as well. It makes sense to cut out luxurious food items and sticking on the basic grocery budget than eating out. Preparing your meals will see you save more money than if you were to eat at restaurants.
Membership and subscription services, including Amazon, Netflix, Spotify, Cable, etc., may also have to go. Be sure to check and cancel any subscriptions with online and print publications, the gym, and anything else that might be ‘gobbling’ up your money. Some of these services will attract a fine should you choose to cancel them before the agreed time. Freezing the subscription for some time might work in your favor.
- Consider Downgrading
A downgrade might be all you need to get your finances back in order. Downsizing, unlike cable cutting or downgrading your Netflix subscription, takes more than just a few button-clicks. It may mean giving up your beloved and expensive car in favor of a smaller, more manageable one or even moving to a smaller place. Driving a smaller, more affordable car and moving to a smaller space or a cheaper town can see your expenses come down significantly. The reduced costs will help free up some money, enabling you to take back the much-needed financial control.
- Look Into Deferment Options
Some service providers may be willing to suspend shutoffs or even waive late fees on request. Credit card companies may also formulate a payment plan that would favor your particular situation. You could also approach your landlord and ask for an extension of rent periods or even delay evictions. The wake of the Covid-19 pandemic has seen many people seek deferment as they try to find a footing. Some of these options might be viable to you and could come in handy when in a sticky situation.
While requesting deferment of payments may enable you to stay afloat amid the pandemic, you needn’t get comfortable. You will still have to foot all these bills in one way or the other when the deferment period expires. You thus should use this period wisely to handle the more pressing issues and even come up with a budget plan to pay these bills off. A short term loan may be better, especially if you have bad credit.
- Keep Interest Rates In Mind
Although delaying debt repayments may allow you to focus on the more important expenses, you still need to keep the interest accrued in mind. The interest will continue to accumulate through the deferment period and might force you to pay much more in the end. While the extra expense may be necessary for the short-term, waiting for too long, especially on high-interest loans, wouldn’t be a wise decision. Experts thus recommend paying at least the interest on these loans during the deferment period to avoid such expenses.
- Find Another Income Stream
Getting a second stream of income can be a real-life saver, especially when your finances are in turmoil. This can be anything from getting a second job or working overtime to get some more money your way. If a second job isn’t an option at the moment, then selling items you no longer need might help. All you need is to set up a listing online or hold a garage sale.
An emergency budget can help keep the ball rolling if everything else doesn’t work. This is one of the reasons financial experts recommend setting up an emergency fund regardless of how much you make. However, the tips outlined above should help you develop a plan to navigate through the tough months and unexpected circumstances.