Mar 31, 2020 3:00:00 AM Savings Tips & How To's
Written by Admin
Let’s face it - people all over the world right now are spending time at home, figuring out a new normal as the world seeks to stop the spread of coronavirus. This has resulted in the need for people of all ages to get creative. Those fortunate enough to do so are working from home. Educators are looking for new ways to provide teachings to their students through webcams and other technology. Fitness enthusiasts are setting up home gyms so that they can stay in shape.
But what if your need is to become more financially fit? Thankfully, this extra time at home creates a great opportunity to organize your finances and set a (new) budget. Check out Spotloan’s tips below on how to take advantage of your time at home to get yourself into a better financial situation.
5 Tips to Organize Yourself for Financial Fitness
- Document your expenses. This may feel a bit oversimplified, but the process of writing down where you spend your money is very important. So, dig out some post-its, find an empty wall in your home, and start writing down where it is that your money goes. Do this over the course of two to four days. Keep those post-its nearby so that whenever you think of something, you can jot it down. Then, after you feel you have it all written down, take some time to organize your post-its into categories. Those categories may include food, entertainment, necessities, non-essentials, etc. Create the categories that make the most sense to you.
- Figure out how much money you bring in. For some of us, this will be easier than others. Perhaps you are facing a job loss and have filed for unemployment, or you work multiple jobs to try and make ends meet. Maybe you receive child support or spousal maintenance on top of what you earn on your own. Whatever it is, take time to document the sources of your income, how much you net (what you receive after taxes), and the frequency in which you receive those funds.
- Compare your expenses to your income. To do this, start by prioritizing your expenses with what is most important at the top. This can be like a Maslow’s Hierarchy of Needs with your basic needs at the very bottom. Ensure that expenses related to food, water, and shelter are addressed first. Then move up to expenses related to safety and security. Then, your psychological needs, and so on and so forth. Once you have assigned all of your expenses and compared it to your budget, see how much you have left over each month. If you are finding that you are upside-down or negative (your expenses exceed your income), then you need to make some changes.
- Create a new budget. Seek out a budgeting system that makes sense to you and make a list of what you need to do to adopt that new budget. As part of this, be sure that you are not spending too much on any one thing. For example, if you are putting more than 28 - 30% of your gross income towards housing expenses, you are likely living beyond your means. If you are not saving at least 5% of your net income, you probably need to cut back on some of your self-fulfillment related expenses.
- Have a family meeting. With everyone together under one roof as the world works through this pandemic, there is no time but the present to have a family meeting and to share out the findings from the previous four steps. Even young children and teenagers are likely aware of what is being said in the news and on social media. So, if you haven’t had a family discussion yet about the future and about changes you may need to make to your spending, now is a good time to do so. Be sure that during this discussion, you are prepared to share facts but can also alleviate any unnecessary or unwarranted concerns that are causing your children anxiety.
Though these steps have been shared in the spirit of the ongoing changes to our economy based on the coronavirus pandemic, these steps can be followed at any time, by anyone. There is never truly a wrong time to get organized so that you can become more financially fit. Creating short-term goals now so that you can reach your long-term goals later will be worth the effort.