Take Control of Your Finances: Big or Small, it matters
Ever wonder how to take control of your finances before or even during a pandemic? I’m no pro on this but there are things I learned when I joined a well-known insurance company as a part-time insurance advisor about five years ago. Our family is just one of the thousands whose financial difficulties and struggles are common, but facing these issues with family finances during a pandemic is something else. In fact, quite difficult.
Here are five tips you can take on to succeed in this difficult part of adulthood.
1. Review your Finances
Knowing how and where you spend your money is the first key element in saving. So how do you really manage your finances? It is best to review and itemize these expenses and consider using the fixed and variable categories.
An example of a fixed expense is your monthly recurring fee for the internet service, or even the monthly installment due for your child’s tuition fee.
A variable expense is something unpredictable or its amount can change depending on its consumption. The electricity and water bills can be included here as the monthly expenses for these utilities definitely vary on their usage. Other examples are food, medicine, toiletries and non-food essentials, and clothing.
2. Cut down your expenses
How did we manage to do this?
Our family has always been on the simple side of almost everything. We only go and dine out when invited by friends, relatives and when we celebrate special family occasions and wins. Sometimes, we end up just feasting over some good food at home. We also had to avoid food delivery.
Also, we had to opt-out of subscriptions that aren’t in the “needs” category, like cable, paid online streaming apps, and downgraded mobile postpaid plans as well. The only subscription plan we kept is the internet (with landline) for online schooling and remote work too.
When grocery shopping, we strictly followed our list. Over the pandemic, especially during the highest restriction, we only do this on a monthly basis. All produce was ordered online from the local buy & sell group within the barangay. We had to take advantage of the free delivery fee and of course, help the sellers from the neighborhood too.
3. Save and Build emergency Fund
An emergency fund can be 3% to 10% of your monthly salary (or every cut-off). This can be included in the expense list under the “Fixed category”. Actually, it has to be in the fixed category. Consider this a mandatory amount you set aside from what you earn from your salary. And if you have another source of income, best to have yet another 3 to 10% savings from it too. This way, you’re building up your savings for emergency purposes without you really knowing or feeling, or even thinking that it is difficult.
The husband has successfully trained himself in doing this, so when the pandemic happened and he ended up letting go of his job, the emergency fund he was able to build up got us through.
Our eldest decided to take on a gap year (she was an incoming freshman at college at that time) and since classes shifted virtually, we transferred our younger child to a public school. Our emergency fund was of great help as it did help us get through for a year after the husband left his employer.
4. Have multiple sources of income
Ever wonder why this isn’t first on this list of tips? I personally think that we need that strong will and discipline first to get to know our expenditures and save even just a little from what you already have and earn (from your stable income), before deciding to add another source of income.
Talking about finances, this is the “go-to” of many individuals and families. Of course, you cannot just jump into whatever business or income-earning gigs there are out there. Again, you got to study and know it and learn the basics. You also got to like (or love) what you do to be able to take care and keep it, be it a business venture, taking in a part-time job, or jumping into the freelance world.
Having yet another source of income will allow you to manage your finances and pay off debts if there are any. Most of us may have earned debts during the pandemic. We can all admit, that even if the government has mandated financial aid and distributed food packages, many still had to resort to borrowing money from either a lending company or from an individual that they personally know.
To avoid drowning from interest rates and late fees, just like in entering something new to you, learn more about the company you are borrowing money from and pick the ones that can be trusted. At the end of the day, it is definitely best to still pay your dues on time.
5. Get insured
We all know that life insurance is about protection. Since there are many types of insurance plans out there, one might get confused about which to avail. There are traditional and a wide variety of VUL plans as well. So as to avoid confusion, know your priorities first and your whys. Are you building up your retirement plans? Are you interested in investing part of your money for your child’s future college education? Are you wanting to purchase something in the future that insurance might greatly help you?
Know your goals and talk to a trusted financial adviser that will help you lay out your needs, plans, and capacity. Find someone that will listen to you and come up with an insurance proposal that best fits your requirements. They are very much willing to assist you in managing your finances well.
Did you know that we were able to enroll our elder daughter in college by withdrawing from part of what my VUL insurance has earned? Now you do. The amount could have even been bigger if only I started a little early at it. But as the saying goes, “the best day to start investing was yesterday, the next best day is today.” So, since you have been reminded by this post, go ahead and contact your financial advisor now. Take control of your finances, start discussing your present and future budgeting now!