As the state and the nation continue to grapple with the effects of COVID-19 there is a growing impact on the economy and the financial well-being of individuals. There are a few questions that can help you decide what your course of action should be during these challenging economic times.
What are the main drivers of financial surviving chaotic times?
It starts with understanding you current financial situation and being honest with yourself on your own financial security over the next 6 months and likely it will require you to reduce your expenses so that you have the ability to build your financial security.
What is the best way to find areas to reduce expenses?
It all starts with looking back at your last 90 days or more of expenses. This prior review should allow you so determine how much of your expenses are on true needs and where there might be fluff that can be trimmed to reduce your expenses. This is also a good way to develop a budget for moving forward.
Why should there be a focus on trimming expenses?
One of the most important steps during difficult times is to build a savings fund for any eventuality. Most of us don’t have a strong emergency fund therefore we need to focus on building this if we can from the savings we achieve from reduced expenses.
What are other financial moves to consider?
This is a time to review your current loans, if you need additional cash flow during the month because you can’t trim other expenses, refinancing to lower your payment or combining several loans could be an option. You also should talk to your lenders if you are already experiencing issues, they may have programs to help you weather this storm.
What else can help a person during times like this?
Dropping financial habits and actions that are detrimental to your financial success. This means avoiding impulse purchases, using discounts and coupons that are easily accessible and quitting habits that are costly and potentially dangerous to your health. Changing poor habits isn’t easy however this transformation can have a major impact on our financial well-being.
What is the biggest mistake that we need to avoid?
Avoid making decisions that are based on other people’s experiences because they may not reflect your situation. Always have a well thought out plan for any financial decision. Too often people let panic be the driver for their actions as we have already seen in several different situations related to the current crisis.