With the pandemic dragging on, the economy teetering on the edge of a recession, and businesses struggling to hold on, the idea of crawling under a blanket until it’s all over sounds tempting. Sadly, this won’t help you weather the storm. However, it’s not all bad news. The tips below will help you manage your finances so you can come out on top, even in these most uncertain of times:
1. Stay consistent with your super
Before making any changes to your superannuation, it’s worth talking to a representative from your fund. If you have a self-managed super fund, there are plenty of reputable SMSF Accountants who can advise you. These experts will help you avoid making choices that seem logical in the moment but that will hurt you in the long-run.
Case in point: When the pandemic took hold, many Australians saw a sudden massive drop in their superannuation accounts, triggering a flurry of impulsive decisions to change investment strategies, or in some cases, withdraw funds early. Just a few months after the dip, those who rode it out and made no changes have seen their balances climb back up. Speaking to an expert can quite literally save you tens of thousands of dollars.
2. Become financially literate
You don’t need a tertiary degree to be able to wrap your head around your finances. Set aside just 15 to 20 minutes a day to educate yourself on money management. You can do this via online courses or even just by reading a new finance article with your morning coffee.
Important topics to start with include:
- How to create your own financial plan
- Debt management
- Improving your credit score
- Creating an emergency fund
There’s a reason why the world’s richest people are able to go bankrupt and then build new empires again – this knowledge is more valuable than money, and it will safeguard you against uncertainty.
3. Bite the budget bullet
Yes, spreadsheets are tedious, but refusing to have a budget in 2020 is like flying into a storm without navigational equipment – you’re asking for disaster. Your budget will show you immediately if you’re spending more than you can afford, and will reveal the categories in which you’re going overboard. It’s the primary tool you need to tweak your finances and get money working in your favour.
4. Check for erosion
With a budget to assess, you’ll be able to see whether any of your habits have been gradually getting out of control. Maybe your once a week UberEats treat has evolved into a near-daily habit. Or perhaps your online shopping has escalated so slowly you didn’t even see it happening. These subtle shifts in your day-to-day habits can erode your savings and leave you wondering why you have so little when you don’t feel like you’re being extravagant.
5. Cut the fat
Maybe you’ve got top tier health insurance when you really only need hospital and dental cover. Perhaps you’ve got subscriptions to multiple streaming services when you really only need one. Though you don’t want to cut all the fun out of your life, if you can learn to be happy with less, you’ll be well placed for sailing through uncertain times with ease.
Follow the tips above, and you will find yourself in calm financial waters, even when the rest of the world is in a state of economic panic.