ILLUMINATION
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ILLUMINATION

How to Be A Personal Finance Pro in an Uncertain World

5 Simple Ways to Control Your Cash in A Mask Wearing World

Photo by Ibrahim Rifath on Unsplash, Logo Placed is Property of Z Tech and Data

Imagine a world where many small businesses are forced to close their doors permanently, people are forced to choose between food or medication, and 14.7 percent of the job force in the United States lose their employment. Sounds terrifying! Right?

This is the world we live in. A society where masks are no longer used to protect identities, but for the safety of each other. A society that has suffered losses from the direct and indirect effect of this virus.

While the world attempts to reopen and find some sense of normalcy, we can prepare ourselves to recover from the damage caused. One of the best ways to recover is to learn how to manage your finances. When you take control of your money, you regain some sense of power and confidence.

Below are five of the top ways to recover from the pandemic and make money one less stress to worry about.

Create A Budget

Budgeting can be hard, but it’s necessary. With many of us having limited incomes right now, it’s important to see where our money is coming from and where it’s going.

To create a budget first add together how much you earn from a current job, business, or any side hustles. Then make a list of what you purchase and what category they might be in. For example, your cat food for Bucky will be under Pet Care while that trip for another Baconator might be Eating Out.

After seeing where your money goes, look at each transaction and ask yourself it is really necessary. While Bucky needs to eat too, you don’t need to enjoy a foil-wrapped burger every other day.

Add a dollar amount to each category, but keep it as small as possible. Make sure to account for fixed expenses as well such as rent, car payments, and other reoccurring expenses.

As a final step, decide how and when you want to track. Excel is a wonderful tool for tracking your finances, but there are hundreds of personal finance apps out there. You also want to choose how often you check and update your finances and accounts. (I personally find that once a week works well for me.)

Live in Your Means, Not Your Wants

We all love to buy stuff, go on shopping trips and use the store charge card, or go to the bar for the fifth night in a row. With a limited income and the inherent risk of contracting COVID-19 from shopping, it’s best to minimize this type of spending. If you earn about $25/hr, don’t spend like you earn $100/hr. Spend like you earn around $10/hr. Many people become unable to pay for basic needs because of lavish spending on $500 belts or gold-dusted desserts.

OK. Maybe you don’t treat yourself to these items. My point is because you are earning money, doesn’t mean that you need or should spend that money. Keep your bank accounts full and healthy! It makes them happy and makes you happy in the long run.

Use Credit Cards As A Last Resort

Credit Cards a blessing and a curse. They are financial elephant in the room. Having enough access to credit is great for everyone to obtain. But having several lines of credit create a false sense of wealth and people tend to see their credit limit as the number in their bank account.

When you use a credit card, you aren’t even spending your own money. A credit limit is the amount of money a bank is trusting you to use. You are using the bank’s cash. Hence why they charge outrageous amounts to borrow money with a credit card.

Credit cards are useful in certain situations such as your primary card is hacked and your bank suspects fraud and sends a new card. That new card might take a few days to arrive in the mail. Having a credit card in this situation is extremely helpful.

Life happens and sometimes your car decides to be irritable and refuse to start. You need the car, but can’t quite afford the repairs until that next paycheck. Using that plastic lifesaver in your wallet will help you keep the same balance in your account while “paying” for the repairs. Just remember you used that card and have a plan to pay it off.

Credit cards are not always good or bad, but nevertheless, a great tool to have for emergencies. Just don’t fall into a debt trap and spend more than needed. Paying the card off ASAP will allow you to save money in the long run.

Check Your Accounts Often

When people become stressed, they may become more vulnerable. Avoid falling into a scam and protect yourself financially by checking your bank and credit card accounts at least twice a week. This allows you to see if a mysterious transaction was put on your account.

Most of us have nearly had our identity or hard-earned cash stolen, some have. Prevent this by looking to see what fraud protection your bank offers and keeping track of what stores and sites you spend money at. If you see a transaction for $500 at Yankee Candle but are not a big candle person, dispute the transaction immediately! Your bank will launch an investigation to see if that is a fraudulent transaction. (Make sure to add that you don’t even like candles.)

Save. Save! SAVE!

This is the biggest piece of advice I would give to anyone as we still struggle with the pandemic. While saving may be tough at the moment, it’s important to create a plan to build your rainy day fund.

Simply open a savings account, make automatic deposits, and only access the account if you need it to pay rent or purchase some groceries.

Almost every bank has a savings account that only requires a few dollars to open. This type of account doesn’t typically come with a card so it’s more difficult to access your money and you might think again when transferring it to your primary spending account.

As for automatic deposits, they are a gift that keeps on giving. Well… it does take money that you can spend now, but it’s going to be incredibly helpful down the road. That $50 saved per paycheck might be nearing $1,000 and will help you pay for a few necessities. It’s smart to use that budget you created and keep about 3–6 months’ worth of expenses in an account in the event you have a rainy day and need to use it.

Personal finance is a very in-depth topic and includes many aspects. While we have so much to worry about in the uncertain world today, I hope these tips have given you some confidence to take control over your finances and focus on other elements of your life such as protecting you and your loved ones.

I recently published my 3rd Udemy class, The Complete Personal Finance Class. This 6-hour course includes a Microsoft Excel crash course and many tools that will help you pay off debts, budget, and save.

PS: If you liked this article, check out 99% of Personal Finance Can be Summarized in Nine Words by Thomas Oppong

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