60-Day Action Plan:
8 Steps on How You Can Manage Your Finances Wisely
A lot of us find ourselves with a little more time on our hands. Taking advantage of this time can be adventitious for your personal financial life. Here are a few things you can do to work through the current crisis and set yourself up for better financial success in the future.
1. Get in the driver’s seat: You are in control of your financial future – nobody can or will do it for you. Although this may feel daunting at first, there are many ways to take a proactive approach in managing your money. Start by assessing your situation: make sure you know how much money is coming in, how much is going out, and how much you have in savings. With a full picture of what you have available, you can prioritize spending more effectively. Does this just affect you? Or do you have a partner working with you?
2. Team Work: Many studies have shown how important it is to be on the same page regarding finances. If you have a partner, be open with them and your family about the overall financial situation. Its not always easy to talk about, but highly important. Both partners should have equal access to and equal say over your finances, including logins and passwords to all accounts. The more transparent you can be with one another, the easier it is to stay aligned with where funds are being allocated as things continue to unfold. At a time when tension and uncertainty are particularly high, it’s a great initial step to mitigating added strain to an already stressful situation.
3. Create a budget. Once you confirm how much money you have coming in and what your monthly expenses are, it’s time to get more specific. Make a list of all the things you need to budget for, then allot a specific money amount to each area. This is a place where technology can help. You may be able to use our personal financial management solution called MX or Money Desktop. Read about in on the website or access it within online banking. It is a robust system that can show trends over time, helps make the budgeting process easier to keep up with, and so you can stay on track. Even if you don’t use a digital solution, this same practice can be applied with spreadsheets or pen and paper. Also, don’t forget to include the government stimulus package relief if/when you receive it. Put that extra money in the most impactful areas.
4. Avoid unnecessary expenses. Once you create specific budgets that helps you see where your money is going, you may now see where you may cut unnecessary expenses. Maybe this is in the form of a subscription that you haven’t used in a while. With subscription tracking software you can easily find which subscriptions you have, so know exactly what you’re paying, and more importantly, where you can save month-over-month. Or, perhaps, it’s a luxury item you’re accustomed to but can do without for a few months. Either way, these recurring expenses can add up fast.
5. Bulk up your savings. While it may be hard to accomplish “bulking up” your savings, it doesn’t mean you can’t work toward creating an account to cover 3-6 months of expenses. You have established a budget and reviewed any unnecessary expenses, perhaps you can allocate these line items into your savings account. You can create a special “multiple savings account” called Emergency Only. Identifying where you can save is the first step. Take a look things you no longer need to spend on. With social-distancing in effect, you may see some weekly and monthly expenses dropping. For example, maybe you’re finding that you now use less gas, or that your daycare bill has dropped to zero, put as much of that extra money into savings when you can.
6. Minimize the cost of debt. Now’s a good time to get out of debt if you can. Interest rates are at a historic low—use that to your advantage. Check in with us about debt consolidation loan options and, if possible, roll everything into a single, low-interest loan. Give us a call to see what options might be best for you. 303.239.1150 or 800.279.3288
7. Defer payments. Use what’s working in your favor. Many organizations are holding off on late fees and/or deferring payments. Check in with each one of your providers to see what they’re offering. This will give you a much clearer picture of how to reallocate that spend and continue to build on your savings. We are offering several options to help those affected by COVID-19.
8. If possible, help the economy and your community. This is a hard time for everyone, but it’s also a great opportunity to lean in and help where you can. One way of doing this is by shopping locally. If you have available funds, help local businesses that may be struggling during the economic downturn. Another way to help your community could be things like giving blood, or supporting regional food banks. Always look to “pay it forward.” Promote the credit union philosophy of “People Helping People”.
We hope this gives you a good place to start taking better control of your finances. Stay safe and healthy!
Sourced by marketwatch.com and bankrate.com and enhanced by Credit Union of Denver