When the economy suffers, it can cause added financial stress. Resources may be limited and saving money can seem like an impossible task. But by making strategic plans and practicing discipline, you can create a game plan that will leave you and your finances coming out strong.
Know Where Your Money Is Going
Knowing exactly where your money is going is the first step to financial planning. Beginning this process can be as simple as taking your monthly income and writing down all your deductions, investments, and expenses so you get the full financial picture. From there, you can begin to categorize and prioritize your expenses.
Decide Your Needs and Your Wants
Necessary and discretionary spending should be established early in the budgeting process. A need is an essential purchase or payment such as rent, mortgage payments, groceries, and any utilities. Your wants are non-essential purchases, mostly used for leisure; ordering take-out, purchasing new clothing, or cosmetic upgrades to your home would fall under this category. Your necessary spending should be the first priority when you have established your net income. Once you know how much you have left over, you can decide where to place the rest of your funds. If you have any debts, it’s imperative you tackle those first.
Don’t Let Debts Compound
In the midst of challenging economic times, paying off your debt may be one of the most difficult aspects of financial planning, but it is one of the most crucial. You may not be able to pay it off completely, but if you can pay it down in small increments, you will free up more money in the long run. If you find yourself with more income than expected, you can pay off larger amounts.
If you’re struggling to get ahead, there are temporary solutions. Your bank will offer traditional borrowing options if you find yourself stuck and in need of a temporary solution. If you don’t qualify for one of their plans, you may choose to seek out alternate lending options that can provide short-term, last-minute financial assistance to help you get out of a financial bind and get back on track.
Keep in mind these payments come with interest attached and should be factored into your monthly budget so they don’t become a part of any existing debts. If you’re unsure where to even begin, consider a lender that offers total transparency for borrowers.
Your Mental and Financial Health Are Linked Together
Psychological stress can find direct links to financial struggles, especially in a challenging economy. A study from Clinical Psychology Review found direct links between anxiety, depression, and debt. Ensure you’re placing as much emphasis on your mental well-being as you are on your finances. Simple steps such as a balanced diet, adequate exercise, and a solid night’s rest can lay the foundation for strong mental and emotional well-being, which will allow you to make smart financial decisions.
There’s an App for That
The benefits of financial planning today include apps that can help make budgeting more efficient and streamlined. Apps such as Wally (or the Android version called Wally+) help you track your spending and keep you updated on how much you have remaining in your budget across multiple areas such as travel and entertainment. The best part? Wally is free to use.
If you’re looking to stay on budget even in the most trying financial times, consider the tips above and you’ll be well on your way.