Money management in times of crisis

Money management in times of crisis

Money management in times of crisis

The COVID-19 pandemic is a harsh reminder that crises can happen at any time. Although this ongoing global disaster will eventually become part of history, this will not be the last crisis we (individually or collectively) experience. This is why, just as you protect your health by vaccinating and wearing a mask, it is also important to protect your financial security by learning how to best manage your funds in crisis situations.

These personal finance rules apply to everyone, whether you are working for a paid job, or struggling to keep the door of a small business amidst capacity constraints and reduced customer traffic, or even As of March 2021, among the 9.7 million unemployed Americans.

Here are seven money management tips to help you get through the rest of the COVID-19 crisis, and any other crises that may arise in the future (let us face it, some of these financial recommendations are applicable at all times, whether it is a crisis or not ) ).

1. Stick to your budget (and improve it if necessary)

You have heard over and over again that you need to make a budget. And there are good reasons-if managed properly, the budget will work miracles (because it allows you to control your money, rather than let your money control you). However, when you are in crisis mode, stress and changing costs can make it difficult for you to stick to this budget (even if you were good at it before). Resist the urge to abandon the budget during the worst of times. If you do, you may find yourself dealing with another financial consequence when the crisis that caused you to abandon your tried-and-tested budgeting practices finally subsides.

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Newbie on a budget?Just like There are many tools to help you make a budget for a small business, There are various templates and programs to help you understand how to control your budget. The best method is relative, but the guiding principles include allocating enough money from each salary to cover all your fixed monthly expenses (mortgage, utilities, insurance, etc.), and calculating how much you need to pay for groceries each month , Gasoline and miscellaneous expenses, priority is given to savings and debt repayment.

2. Big savings/plans

As a small business owner, You know that you may not want to use working capital to purchase expensive equipment or fund the construction of new facilitiesThe same theory applies to your personal finances, especially in times of crisis.Yes, that’s okay-maybe even smart, considering the following facts Interest rates are so low—Buying a new house, upgrading dishwashers or replacing aging vehicles in times of crisis, but doing so may disrupt cash flow, which may not be a good idea.

Instead, set aside specific funds to cover related expenses. Maybe this just means allocating a certain amount of money in the “dishwasher fund” every month, or waiting to buy a new house until there is more down payment on hand. Either way, please think twice and feel free to use what should be your groceries money to buy newer/more expensive cars.

3. Analyze your expenses

Just because something is within your budget doesn’t mean it must stay within your budget. Are you really using all these apps and streaming services? Do you really need that monthly subscription box? Can you afford to clean the house professionally twice a month? If the answer is no, press pause on these items. When the time is not so uncertain, you can start again at any time.

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4. Seek help

Regardless of the nature of the crisis (health, personal, business, etc.), there are plans to help people fulfill their financial obligations in difficult times. Usually, all you have to do is to ask. The services provided range from the most basic (such as food boxes distributed through schools, community organizations, and places of worship) to more formal types of assistance, such as (COVID-19 specific) Government assistance program for small business owners.

You can also ask your utility company and other service providers for extensions, or you can If you need it, please apply for assistanceIf you are trying to deal with a medical crisis, please ask your provider’s social worker for help-many hospitals work with non-profit organizations to provide financial support for patients in need.

Although seeking financial assistance is not always easy, it can go a long way in successful fund management during a crisis, because a certain category of help allows you to reallocate funds to more critical budget categories when needed.

5. Pay attention to your credit card spending

Cash back rewards are great, but not if you pay interest on purchases to earn these rewards.Although using a credit card to pay for things you can’t afford is usually not a good idea, it is especially problematic during a crisis, as the pressure of a crisis situation can lead to out-of-control costs (be sure to pay your bills on time as well, because late payments will eventually affect your Credit score).

6. Be picky about how you use your stimulus payment

Of course, you can buy a new TV with a check or invite your family to spend a weekend vacation. But before that, please consider whether this is the best use of funds. Do you have outstanding debts, or do you need cash to fund your child’s extracurricular activities? Does your emergency fund not exist? If so, you may want to consider using at least part of the stimulus measures for these practical projects so that you will not scramble to pay for it in the future.

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7. Remember, your emergency fund can help you in crisis situations.

Speaking of emergency funds, when you work hard to deposit money in a savings account, using that money can be painful (even if you really need it). However, the whole point of an emergency fund is to help you survive a crisis or cover the cost of unexpected expenses, so you should consider all the options available. If you are considering using an emergency fund, it may be helpful to plan how to rebuild the fund (at least three to six months of living expenses) when your financial outlook improves.

Fundbox and its affiliates do not provide tax, legal or accounting advice. This material is for reference only and is not intended to be provided and should not be used as a basis for tax, legal or accounting advice. Before conducting any transaction, you should consult your tax, legal and accounting advisors.

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