Due to the current COVID-19 outbreak, most consumers are expecting a recession in 2021. Based on a survey that analyzed around 2,600 American adults, from 80% to up to 90%, believe a recession will happen next year. With the online spending on the rise and more than 30% of the income going to grocery purchases and other goods, it’s crucial to budget our finances now more than ever, especially in these uncertain financial times. Plus, the better we handle the budget, the less likely we are to stress out.
So, managing income wisely should come first. Here are five ways to budget in these uncertain times.
1. Draft Up a Spending Plan
According to Melanie Hardie, a senior financial consultant at Ceridian, writing down a spending plan should be your top priority. A well-made plan will give you proper insight into your debt and income. That way, you can figure out your purchasing priorities.
To do that, write down your total income. Plan out your spending routine based on everything you have to pay and deduct the cost from your income. This will give you a general idea of where the money goes.
2. Cut Back on Your Spending Habits
With the spending plan, you will have a clear guideline of what to spend the money on. But, the key to making it work is to learn to differentiate "wants" from "needs." If you focus on the necessities, you will always have the budget to cover the "needs."
So, try to cut back on investments and spend as little as possible on bills or anything else that might come in handy. For example, instead of ordering take out, cook at home, brew your own coffee, pay attention to the electric bill, etc.
3. Ditch the Credit Cards and Use Cash Instead
According to studies, when people pay with credit cards, they can spend up to 83% more than they would if they paid in cash.
If you don’t think you can handle your spending, try to pay with cash. The more you carry the money around, the more you realize its worth. Therefore, you are less likely to spend it on anything that is unnecessary.
4. Set Money Aside for Your Emergency Fund
Always be ready for the worst-case scenario, and with possible financial struggles on the way, you should try to save up as much as you can. That's where an emergency fund can come in handy. Set aside enough cash to get you through 3 to 6 months. These funds should be enough to cover the basic expenses.
5. It’s Never too Late to Ask for Help
There are plenty of financial planners that can help you stay on track. Even if the stock market could be going down, it’s better to manage your finances than to spend them all. A financial planner can show you where you are going wrong. They can guide you on how to re-locate your funding, develop a plan, or set up goals. When it comes to making a decision, it’s hard to go wrong with an experienced financial planner.
Managing the budget is never easy, especially in these uncertain financial times such as these. But, sometimes, all it takes is a step in the right direction. Now that you know your possibilities for managing your finances, you will be more prepared to handle your money. Plus, you will be much more comfortable with your spending habits.
Did you find our guide helpful? Have you tried any of these methods before? Let us know in the comments below.
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