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Hard times happen but if we follow some simple financial tips we can help our family survive through tough times.
Navigating the unpredictable journey of life, with its inevitable highs and lows, becomes more manageable when armed with the foresight to anticipate and overcome financial pressures. Proactively making arrangements now lays the groundwork for effectively dealing with potential financial crunches in the future, ensuring that crises can be not only navigated but often avoided altogether through strategic planning.
In the ebb and flow of financial stability, it’s crucial to recognize that comfort during non-crisis periods presents an opportune moment to plan effectively. This is where a set of practical financial tips comes into play, guiding individuals toward building a robust financial foundation that can withstand the uncertainties of the future. Let’s delve into these tips that serve as a roadmap for creating financial resilience.
7 Financial Tips to Start Following Today
Analyze your spending habits
Your mind probably races with suggestions of things you waste money on. It might be trendy clothes, bags, digital products, or it might be hanging out with your friends in luxury coffee shops at the weekend.
The fact that these things give you pleasure and enjoyment does not mean they are needs, and they should be identified as areas you can cut when necessary or reduce to achieve your goals.
This doesn’t mean these all need to be cut or cut forever but reevaluate how much you want to be spending in these areas.
Understanding why you spend the way you do can also help you create better habits. The Psychology of Money – How Saving and Spending Habits are Programmed in Your Brain can help.
Using the free expense tracker below can help you analyze your spending easily.
Set Your Financial Priorities
Think about what priorities money will help you with, and write them down. What plans do you have in the future for education, health care, or shelter, for instance? If you do not work towards those goals, you will never achieve them.
You want to be sure to do this often. Your financial priorities will change over the years so make sure your goals continue to work with your priorities.
Bring Your Partner or Family On Board
You can’t win the financial battle on your own. When conducting research or conducting due diligence, don’t ignore other stakeholders. All of your family members should contribute to your budgeting and financial plans.
This stage will likely involve some compromise on all parties’ parts. You need to come to a place where everyone can agree or there will always be friction when it comes to finances.
Plan and Stick with your budget
Establish a spending plan after you determine where you are now and your goals. You should live within your financial capacity or just below it as part of your budget.
Reducing or eliminating other bills like entertainment, gaming, or subscriptions is a good option when your finances turn bad. Even when you are profitable, try reducing your expenses for a period so that you can be sure your plans are working.
Put money aside for emergencies
The very first thing you should do is set aside money that you can live off of for three to six months in cash that is easy to access. Calculate your needs-based budget number to determine how much you need.
What’s the needs-based budget? It is the exact amount you’ll need each month to cover the whole family’s essential expenditures. After you remove all your wants from your budget, what remains are your actual needs. You can learn more about your needs vs wants to help make this budget work for you.
Keeping yourself out of debt
Whenever possible, don’t get into debt in the first place so that you don’t get into trouble later.
If you have consumer debt, consider paying it down as quickly as possible, even with your savings. In general, consumer debt without collateral has very high-interest rates, so canceling that type of debt will give you a better return on your money.
In some instances, debt can be viewed as an investment, in which case it is acceptable to incur it. A low-interest home loan and a down payment of 20 percent, for example, are good uses of your money and debt.
Diversify your income sources
Setting up a system where you can generate income from several sources is one of the best ways to protect your finances. By doing so, if one source is having problems right now, the others are most likely okay.
Starting a side hustle is a great way to add a new income stream to your financial plan. There are many great options out there so you are sure to find one that works for you, you can find 8 side hustle ideas on this blog to help you get started.
When it comes to living a long and prosperous life, financial planning is essential. People will go through twists and turns, and sometimes they will be up, and sometimes they will be down. It won’t be as bad as you think if you’re well-prepared.