Money Management Tips
Bills are an annoying reality of adult life. But when you’re dealing with the economic aftershocks of the global pandemic, they can be one of the toughest parts of your day.
If you aren’t sure you’re up for the challenge, this guide is here for you. Whether you are dealing with lost pay, out of work, or you just want to whip your finances into better shape, these four tips will help you manage your bills better.
1. Focus on Your Needs First
Needs are the expenses that keep you healthy and safe. Think keeping a roof over your head, running water, heat, and electricity, and food on the table.
They may also include financial obligations that protect your finances, like paying off your line of credit or personal loan.
Needs make up the most important parts of your budget. If you can’t afford them, you’re in trouble, so you should always make sure you have enough cash to cover your needs.
2. Save for a Rainy Day
It doesn’t matter how sunny it is today or tomorrow, one day the skies will cloud over, and the rain will start to fall. The same rule applies to your finances. It doesn’t matter how well you’re doing now, eventually you may run into trouble.
Saving for that rainy day means you’ve put aside some cash for a time when your luck runs out. These emergency savings can help you handle loss wages and unexpected expenses.
In the past, a standard target for these rainy-day savings has been three to six months’ worth of living expenses. Now, the pandemic has changed everything. While an emergency fund as big as a year’s worth of expenses isn’t a bad idea, it may be harder to achieve.
Check out the MoneyKey Blog for budgeting tips and other helpful saving advice for kick-starting your emergency fund.
3. Know Your Lending Options
Twelve months’ worth of living expenses may be a challenging goal, especially if you’ve been hit hard by the pandemic. You wouldn’t be alone — twenty-five percent of Americans have zero emergency savings, according to Market Watch.
If you’re building your rainy-day savings from scratch, take some time to find out your options when it comes to borrowing money. This research may come in handy if you fall short of what you need in an emergency.
Compare the financial products you find carefully, as they have different terms and conditions that greatly impact how you pay it.
Take, for example, a comparison between payday and installment loans. While payday loans direct lenders only offer short term loans that you must repay by your next payday, there are installment loan direct lenders that provide loans with longer terms, giving you more time to repay what you owe.
4. Update it Regularly
A budget is a financial tool, and just like the saw or hatchet in a household toolkit, it can get rusty without regular care.
What does it matter? Well, much like a rusty saw, an out-of-date budget isn’t good at what it does; you’ll have to work harder to make sure you pay bills on time and set aside savings.
Try checking in with your budget once a month to see how it’s shaping up. This regular review will help you spot where you might be overspending on wants, giving you a chance to correct them before they make a big impact on your finances.
Bottom Line
If you’re wrestling with your bills, don’t let them get the upper hand. Start thinking strategically about your spending to ensure you have what it takes to pay them every month.
