Financial Tragedy isn’t permanent. You can get back up, save and move onto the next step of your life. The key lies in the next steps you take.
Pandemic has been tough of many of us. There are people who got laid off whilst there were some who lost their entire life savings in treatment or just to feed their family and themselves. You may find yourself in a very bad financial situation in a blink of eye but it is okay. You can get out of it. A financial crisis may seem like a nightmare to you and getting out of it is going to take time. Meanwhile, prepare yourself and your bank accounts ready for it. I am going to list down some steps that you have to take without fail.
Get a Reality Check
Understand where you are financially. Check all of your bank accounts, your debts, etc. There are some contributions that are done automatically, it is time to stop those contributions. If you are someone who invests in retirement funds, stocks, etc. put a pause on them. The primary goal that you should have right now is to have as much of liquid cash as possible. So, put a pause on all the payments.
Ensure to check your bank accounts every week, this won’t magically increase your bank balance but you will have an idea of where do you stand financially and take further steps based on that.
Prepare a Budget
Now, every rupee you have is valuable and you have to aim at stretching it as much as possible. With inflation and hiked prices you may think of it as an impossible situation but trust me, it is. You just have to make a lot of adjustments and cutbacks. It is just a phase so get ready to make some temporary sacrifices. Here are a few things that you can cut back on-
- Dining Out/ Take Outs
- Shopping trips. You don’t have to go for grocery shopping once a week. Make a list of groceries you want for the entire month and buy them in bulk. There are some wholesale stores who will offer you discount when you buy in bulk.
- Cut down on rent, mortgage. Move to a smaller house or a locality with less house rents if possible.
- Unplug electronic items, use them when you need. This will save on your electricity bill.
- Cut down on your transportation, walk for places that you can. Taking out your vehicle every time will be a burden on your pocket. So, think about it.
- Cancel the subscriptions, memberships to any OTT platforms, cable, gym, etc. There are a lot of other free things to do for fun. You can always use free YouTube videos to exercise rather than spending amount on gym subscription right!
- Cut down purchasing new items. If possible go for used ones, they will be available at cheaper prices. Ensure that you check the quality.
- DIY can help you a lot. For example, you can use vinegar and baking soda to clean the surfaces in your house.
- Stop outsourcing your work like laundry, handyman, etc. Do them by yourself. You just have to spend some time on it and believe me it is worth it.
When you cut down on these, you will see a huge change in your budget.
Evaluate Your Debt
You may have some bad debt that you have to pay every month. Talk to the lenders, banks, etc. and explain your situation to them. Ask them to minimize the amount for time being and ensure that you are not paying a lot.
You should always have cash in handy. If you keep clearing your debt aggressively, you will have to make debt to clear your day to day expenses. So, try and minimize the debt repayment.
Keep Your Priorities Straight
Ensure that your priorities are right. Food, shelter and transportation are the primary needs. Keep money for all of these things. Have liquid cash with you to sustain for 6 months to a year and generate income simultaneously.
Sell Your Stuff
This is important. Sell the stuff you don’t need. Right from your old purses to shoes, TV, etc. there are a lot of sites where you can sell the stuff you don’t need.
If you are really in dire need of cash, sell the expensive stuff that you need and replace it with a cheaper alternative. For example, you can sell your latest iPhone and get an older version of it or any android phone. This will help in saving up few bucks.
Money Saving Apps to the Rescue
There are so many money saving apps that you can rely on to save some more bucks. Use the discounts, coupons and loot deals to get the products at slashed prices.
Generate Passive Income
Try out different side hustles. Right from blogging, vlogging to coaching, there are a lot of side hustle options that can generate you passive income.
How to Prevent a Financial Crisis?
Remember the age old idiom “prevention is better than cure.” It is true for the financial crisis too. It is always better to be prepared for the worst that can come in future. Right from Day 1 of your earning, try and save some. Invest the money if you can or just let it lie in the savings account.
Having an emergency fund will help you in various ways. Make sure that you have cash for at least 6 months and stretch it to one year if possible but have a cash reserve. Be disciplined financially and this will help you in saving up money as much as possible.
Financial crisis can trigger various emotions and hurt you in different ways. It is okay. Go through the grievance period. It is okay to live from one paycheck to another and do not feel ashamed of that. You will get right back on track once things get settled. So, prepare a plan and follow it to the point. It is important.