Managing your finances is the most important in one’s day to day life as it is the only source for satisfying the primary needs. The world has seen an outbreak of the pandemic due to which many people around the world have faced a lot of problems. Out of all of them the main problem faced was related to the earnings and finances.
Mainly the middle-class and the low-class families were the most affected ones. Due to the sudden outbreak most of the earning individuals have lost their jobs and the families have lost their income sources. The economy was also affected vastly. Poor planning and management of finances can affect an individual mentally and his overall well-being.
To avoid such situations a proper planning would save one’s life from getting stressed about the current situation. Adoption of healthy strategies can help in managing finances efficiently.
Differentiate between the wants and needs:
Want is something which an individual desires about and a need is something that is needed to survive. If an individual has clarity about what he wants and needs then it makes it very easy for him to decide on his spending. In the current situation an individual’s priority must be satisfying his needs rather than thinking about his wants.
- Create a budget for the time period.
- Mention the earnings, spending and borrowings (if any).
- Add the surplus to the Savings account.
- Create your own balance sheet to know your financial position.
Manage your accounts:
Managing your accounts helps in differentiating your availability of financial resources. For example, if you own a credit card then you must be responsible enough about its usage. Credit cards usually encourage one individual to make impulsive and unwanted purchases. In the current situation these impulsive purchases are the main thing to be avoided.
After the purchases are made from the credit account there will be huge interest rates charged if the amount is not paid off before the due date. So, do not let these extra charges add up to your list of liabilities. Instead use the credit cards for making smart purchases like getting cash backs. It’s advisable to use the current account for day-to-day transactions and make sure the records are maintained.
Have ready Cash in Hand:
We have witnessed how the pandemic had a huge effect on everything. Due to the pandemic, there was a lockdown announced worldwide and all the public amenities were shut down. In a situation like this it is better if we have ready cash available with us to make any small payments.
You might need money to urgently rush to a hospital and if the banks are closed then the situation becomes worse. It’s not about storing huge amounts, it’s about having a reasonable amount of cash available when required. This will not only help you but can be a source of help which you can provide to others.
Avoid Debts:
It is highly advisable to avoid debts in this current situation. Firstly, you would be liable to pay, secondly there may be high interest rates and finally this is going to add up to your mental stress. Only if there is a very urgent and unavoidable need to borrow then do it if not as mentioned earlier manage with the available resources and try to satisfy your needs.
Before taking any borrowings evaluate the assets you have and then only if they are not satisfying the requirement criteria go ahead and borrow. When borrowing make sure it is done from a reliable source and you have enough pay back time with reasonable interest rates.
Invest or Save:
It is always a good choice to make investments and savings. Investments may be long term and the value might be changing with you losing some capital but the returns can be promised in a particular period of time. Savings can also be a good option but the only drawback with savings is that the value of the money would not increase but they are readily available when required.
In terms of investment, the money might not be available when required but the value will be increasing with the passing time. The investments and Savings you made earlier can be handy for usage in the current situation.
Other than all of the things mentioned above it is important for an individual to be at peace mentally only then everything can be handled carefully and efficiently. If there are financial issues, they can be solved by taking a little piece of advice.
Usually, people end up taking lives in this situation as they start losing hope because of the financial conditions where they lack in supporting their families. But harming oneself is not the solution. As we know every problem has a solution so does this. Proper planning and management of finances can pave a way to better living.