- When your finances are in disarray, evaluating your financial situation and creating a budget will help you determine if you can right the ship.
- Cutting costs and increasing income are the two principal ways to improve your finances.
- If reducing expenditures and earning more is not enough, debt relief agencies can help your get your finances in order.
Covid-19 created financial challenges for millions of families. Job losses, reduced hours, and mandatory stay-at-home orders impacted nearly every aspect of life, including the family finances. However, asthings return to normal, there is the hope that your financial well-being will also follow.
But what happens when it doesn’t?
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Here are six steps you can take today to shore up your finances and build a solid economic future, even if you have not financially recovered from the pandemic.
- Find out where you are financially: A financial assessment requires you to see your finances as they are. For example, how much do you bring home every month from all sources? Are you charging essential purchases or barely getting by? Do you waste money on stress and impulse purchases? Is there money in your savings account? Answering these questions will help you understand precisely where you are from a financial perspective.
- Set long-term financial goals: Without goals, there is no reason to avoid spending 100% of what you earn, living in the moment. Consider where you want your life to be in five, ten, and twenty years from now. It may seem like it’s far in the distance but taking small steps today can get you to your goals. For example, investing $100 a month at 8% will grow to $7,294 in five years. That same $100 monthly investment will become $18,012 in ten years and $56,899 in 20 years.
- Create a budget and make sure it balances: The first step to shoring up your finances is to prevent spending more than you earn. Base your budget on your regular take-home pay without accounting for occasional windfalls like bonuses or commissions if they are of varying amounts.Then track spending for 30 days to get an accurate look at how you spend your income.
- Find ways to cut costs: There are only two ways to improve your finances, earn more or spend less. Cutting costs can provide immediate benefits that will either help you balance your budget or give you the extra money you need to pay down debt or reach your long-term financial goals.
- Address income challenges: Lost income or facing a long-term reduction in salary may require you to seek other employment opportunities. It might mean taking a second job, gaining a new skill that makes you more marketable, requesting a raise, or looking for a new position in your industry. Employment opportunities are increasing as COVID becomes less impactful on our day-to-day lives.
- Ask for help: If you cannot balance your budget due to high levels of credit card or medical debt, a debt relief agency may be able to help. If you qualify, debt settlement can help you pay off debts without paying the total balance. You get immediate relief from high debt payments and can repay creditors in as little as three years.
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You can often get your financial house in order by cutting costs or increasing income. However, not everyone can work three jobs and live on beans and rice for several years to correct the impact of financial hardship. If you face a situation where you are struggling to pay your bills, and you still cannot make your finances work without cutting into the essentials, there are debt relief options that can help.
How can I improve my finances?
Establishing a budget, cutting spending, and increasing your income are the key methods to improve your finances.
How can I stop struggling financially?
Start with a critical look at your finances. How much do you spend each month in relation to your income? If you spend more than you make, your finances will continue to decline. If you cannot rectify your income/spending gap, you can seek help from a debt relief agency for assistance.
How can I pay off my debt when I am broke?
Start with a budget and an honest look at your income and spending. Even if you have a small amount extra, putting it toward high-interest debt will slowly pay off the balances and free up money,and enabling you to achieve financial freedom.