Having a significant hit on your finances by any event, such as unemployment, pandemic, disease, etc., can be traumatizing. It can make you go sleepless for nights.
This mere thought of going bankrupt can take a toll on your peace. Being prepared for the situation may not change the situation, but it will help you cope with the situation in an effective way.
Being prepared for the situation gives you the strength to find the right solutions to your problems. It is easy to work on your concerns when you are sane and calm.
Managing your peace with finances
You may want to fulfil your expenses but may be falling short of money. Buying a new car or a new house may be on your list. But your financial health (score) sometimes doesn’t allow you that. In such cases, you can try unsecured loans for bad credit, which you can take from direct lenders only.
There may be other lenders providing these loans but the flexibility in the lending terms you will get from private lenders.
Here are a few tips for dealing with your finances effectively:
1. Focus on Liquid Savings
To be financially stable, you should focus on the resources that can be easily liquidated. Resources such as certificates of deposit, short-term government investments, savings, etc., can be really helpful in difficult times.
The main benefit of these resources is that the value doesn’t fluctuate with the market and will give a decent return when you need it, unlike stocks and exchange-traded funds.
Having such resources may save you from any financial loss. Also, there will be no early penalties.
Stocks are considered a risky venture as they are dependent on the stock market and may fluctuate often.
The golden rule of staying financially stable is to budget your finances. Budgeting will help you get a clear picture of the incoming and outgoing of your money in an organized way.
Budgeting your finances will also help you to keep some money aside for the emergency fund. Also, it will give you an idea of how much means you have to incur your expenses and put them in your savings account.
A budget may open your eyes and help you stabilize your finances by giving an actual picture.
3. Minimization of monthly bills
In case of financial constraints, it becomes necessary to minimize your monthly bills and expenses. Keeping your monthly payments on the lower side will help you make regular payments even when there is a money shortage.
As mentioned below, focus on budgeting and keep a check on your spending. Check on payments that are less required and if they are really important to be continued. You have to do a self-analysis to know your finances well.
Ask questions such as “Can I switch to a lower internet plan”? Once you ask these questions, you can find answers and cut out on your expenses.
Once you can minimize your expenses, you can mould your habits as per your financial situation. To save you from any emergency, you can buy any lower amount of insurance and be prepared.
4. Bills management
There may be situations when you pay late fees or a penalty. But making it a routine is not suitable for your financial health. By just being organized in your payments, you can save a lot of money, and you can stay on top of your bills.
You can set monthly reminders to make things easy for you. You can set reminders on your phone or any application of your choice. These reminders will remind you of the payment date and also 3-4 days before the payment date.
5. Evaluate your Non-Cash Assets
To be financially prepared, you have to include all your assets, i.e. liquid assets and non-cash assets. In case of frequent flying, you can use your miles to save money and still enjoy the benefits of travelling.
You can collect all your gift cards, grocery cards, and any other reward cards to get them redeemed. These non-cash assets will help you reduce your monthly expenditure and prevent you from buying unnecessary stuff.
6. Credit Card Debt payments
One way to reduce your monthly payments is by paying your credit card debt. Your credit card may incur high-interest rate payments every month, but if you ensure to pay your credit card debt, you can cut down on your high monthly expenditure. You can take quick and easy loans to clear off your credit card payment.
Clearing out your interest rates can help you build some funds for emergencies. Also, it will divert you from these petty issues and keep your focus on more critical matters in life.
7. Good Credit Card Deal
You can ask your bank for a good credit card deal. You can try for a deal that offers a lower interest rate and allows you to breathe.
Paying a lower interest rate will help you to spend on other important things and save money. It is advisable to ensure that your balance transfer fee is more than the interest rate just in case you want to go for a new card.
8. Find alternate ways of earning cash
With one source of income, it may be a possibility that you may not be able to cater to your expenses efficiently. You can look out for alternative ways to earn extra cash, such as selling your possessions that are no longer in use.
There may be no comparison between the money earned from these activities and your primary job, as this money would be too little. Still, adding the amount over time will lead to a significant amount and eventually facilitate your expenses.
9. Talk to someone
The best way to deal with any stress is to talk to someone who cares about you and wants you to stay happy. Financial stress is no exception. When facing financial issues, staying with people and sharing your thoughts is always good.
Do not seclude yourself. Talking to your close people is advisable as you may feel awkward disclosing your income and debts. But if you keep things to yourself and do not talk, it will make things worse and can push you into a financial quagmire.
Once you start sharing your problems, you will feel that people understand, as most of them are going through the same issues. Keeping your financial problems to yourself can amplify your concerns and make you more stressed.
It is not necessary for the person you are talking to give you a solution to your problems. You are eased off from the burden and feel better by mere talking to that person.
Another option is to seek professional advice. You can go for professional counselling if you feel awkward talking to any of your family or friends.
Life is uncertain; hence live your life to the fullest and save money for the rainy days. If you start making small changes in your financial routine, you can cut down on your non-essential finances.
Also, eliminate impulsive spending and give a break to yourself before buying anything.