A lot of people are reeling from the effects of the first lockdown that was necessitated by the coronavirus pandemic. Businesses have been decimated, leaving a lot of people in precarious financial situations. Things might get even worse if there is a second lockdown. If you are feeling some relief from the easing of the first lockdown’s measures, it is time to get your finances in order so that you are not hit as hard as you might have been by the first lockdown if there is a second one. Here are some tips to help you do exactly that.
Consolidate Your Income Channels
Although setting a budget and knowing where you are spending money are both important, the one thing that can make doing both of those things easier is consolidating your income if you have more than one. Consolidating your income lets you know how much comes in every allotted period of time, be it a week or a month, so you know how much you have to put to different uses.
Track Your Money
Once you know how much money you have coming in, it is very important that you keep a close eye on how you are spending it and where. The best way to do this is to have a budget. When coming up with the budget, it would be useful to have a look at your spending habits. This will help you align your finances with the goal of having enough money to carry you through a second lockdown.
For example, if your social habits like dining out consume a huge chunk of your income, you could take steps to cut back on those expenses. You could also reduce the number of appliances you have in your house so your heating and electricity budget are smaller or even opt to use a ride-sharing service, if available, instead of your car.
Save More Money
Once you have your budget in place and have found some areas where you can cut your expenses, the next step should be saving more money. The obvious place to start is by putting all the money you saved from slimming your budget down into a savings account. Ideally, you should have a goal for how much you want to save every month. A few changes to the things you deem essential, like cooking at home or cancelling a subscription you do not need, can lead to huge savings.
Automate Your Savings
If you have a regular income and you are having a hard time putting some money aside, you should automate your finances. Automation can be as simple as scheduling a weekly or monthly transfer to your savings account. It can also be about paying your bills on time to avoid late charges and getting into debt.
Have an Emergency Fund
Saving money for day to day expenses is good, but you also need to consider emergencies. Although they are usually out of your control, emergencies can and do happen and they can be devastating, especially in these hard times. There are some simple tips for saving for emergencies like putting every small bill aside for a rainy day to writing yourself a cheque every time you get paid and putting that aside for emergencies.
Start an Online Business
If you find your finances are not enough to get you through a second lockdown, you should consider increasing your income. An online business is a good way of doing this, especially if you get into the right market segment. As people are working from home, big clothing brands have reported that the demand for leisure-wear has increased as the demand for business and office wear has fallen. Starting an online business for clothes that people need while they stay and work from home could be a good way to earn some extra money so that you have enough for everything you need.
Get Out of Debt
If you have an income, you should try as much as you can to get out of debt. You do not want to be in a situation where your financial situation is not as healthy as you would like and you still have debtors knocking on your door or sending emails and letters asking for payments.
There are lots of different ways to get out of debt and one way of doing so is paying more than the required minimum. While finances might be tight due to the situation that we all find ourselves in, you should do everything you can to pay off as much as you can.
Start with high-interest debts and loans such as credit cards and business loans. These are the debts that have the highest probability of wrecking your credit score and life. This is because, with their high interest rates, the amount you need to repay might increase faster than your ability to pay. Debts and loans with low interest rates should be paid back in order of decreasing interest rates until you have paid off all your debts.
Another fantastic way of getting out of debt is by using third-party companies to negotiate for a settlement. In many cases, you will be able to pay a smaller amount than what you owe. If you have an income, both of the above tips are a good place to start to get out of debt, but there are lots more tips at https://newhorizons.co.uk/loans-for-bad-credit/8-tips-for-getting-out-of-debt/. Those tips are graciously provided by New Horizons which is a leading loan introducer. They help people find loans by letting them choose between different loans from market-leading lenders. The best thing about their service is that there is no paperwork, no credit footprint, no fees and an instant decision if you find the right lender.
Once you have firm control over your debts, you should do everything you can to ensure you do not get into any more debt, at least for the time being. Stop using your credit card for non-essential products and services and stop borrowing in any way.
Check Up on Your Investments
Your investments can be a source of finance when you need it most, so it is important to ensure your portfolio is healthy. Although a crash in the market, which is likely during a second lockdown, is cause for concern, it should not be if you have invested the right way. Check up on your portfolio and talk to your investment manager about diversifying it and investing in short-term options.
Liquidation as a Last Resort
When all else fails, you still have the option of liquidating some assets so you can get everything in order before the second lockdown. Start by making a mental or physical list of all the assets you have available and which ones you can liquidate if the need arises. The options will depend on what you have in your portfolio but in many cases, gold, equity holdings, real estate, works of art or fund holdings can all be liquidated.
Having a pecking order is important because you do not want to liquidate your most valuable assets first before you have a clear understanding of how the second lockdown will affect your finances.
Getting your finances in order right now is the best way to ensure you and your family can get through a second lockdown. Take steps to have a budget, control your finances and get more money when you need it, be it through liquidating some assets or starting an online business.