No doubt, whether in regards to our finances or life in general, the majority of us have been in survival mode for the past two years. Unless you’re a billionaire or one of the newly-minted millionaires, you probably had your fair share of financial worries during the pandemic. The economy has changed dramatically over the last couple of years and we are not in the clear yet. However, the news isn’t all doom and gloom for the average American. And there are ways we can successfully manage our financial plans amid the changing social and economic landscapes. These four simple finance tips are fairly broad and tend to overlap, but are a good foundation for getting your finances organized in the coming year.
Emergency Fund & Savings
Now is a good time to make an honest assessment of your saving habits. If we have learned anything over the past two years, it is that we need to be flexible and prepared for the unexpected. And the best way to do be prepared is to have a reliable emergency fund. The amount of money you should have in your emergency fund will vary depending on your lifestyle and financial obligations. Generally, the advice has been to have enough saved to cover 3 – 6 months of your living expenses. However, let’s face it, for many of us, that goal may seem unattainable and daunting in the face of the crises we have faced over the past couple of years. So don’t beat yourself up if that isn’t something that seems possible for you at the moment. The important thing is that you create a savings plan that will work for you and you enact it.
Be a Debt Slayer
The White House recently announced that they are extending the pause on federal student loan repayments for an additional 90 days. If you can afford to, now would be an excellent time to make some extra payments on your student loan debt. On the other hand, if you have other outstanding debt obligations, like credit card debt or personal loan debt, that carry a higher interest rate than your student loans, you could use this opportunity to throw some extra dollars that way. The important thing is to be smart with your debt management. The debt snowball and debt avalanche methods are two tried and true ways to slay that debt!
Analyze and Track
Do you know how much you spend per month on subscriptions? How much you are spending on eating out? Do you have your groceries delivered – how much are you spending on delivery fees and tips? Many of our spending habits that deliver convenience can also add up in the long run. Are you an impulse buyer? You need to nip that in the bud and stop buying stuff you don’t need! Take a long hard look at your spending habits and try to identify any unhealthy patterns that need correcting. Use this assessment to cut out unnecessary spending.
Check Your Credit Reports
Annual Credit Report.com allows you to obtain a copy of your credit report from each of the three major credit reporting agencies, Equifax, Transunion, and Experian. Traditionally, you have been able to access your credit report for free once a year. However, during the Covid-19 pandemic, the three agencies have been offering consumers access to their free credit reports on a weekly basis. Take advantage of this in order to maintain an accurate snapshot of your credit history.
Overall, these finance tips do not change much from regular times to pandemic times. The key is to maintain good habits and stay on top of your debts. Know where you are spending your money and cut out anything that is unnecessary. And save where you can when you can, so that when the unexpected happens, you are prepared.