With the COVID-19 pandemic, many people’s financial situations were sternly tested. A lot of individuals were out of work for long periods or had to take a lower pay. Thus, many are now looking at what they can do to protect themselves financially in case another emergency occurs in the future.
The pandemic has been an eye-opener for many, showcasing how important it is to be financially prepared. Emergencies are not something you can predict. You might have an accident, your car might suddenly break down, or another pandemic might set in.
Whatever the case may be, it pays to be well prepared for all possible eventualities. This article will showcase some ways in which you can improve your financial readiness.
Audit Your Personal Finances
The first area that people should look at is to assess their current financial situation. This is a simple but very effective exercise. You look at all of your usual outgoings during a monthly period and identify areas where you can cut back on certain expenses.
Assessing the non-negotiables is also important. This allows you to properly allocate your income to vital aspects of your financial situation. Once you have accounted for regular expenses like rent or mortgage payments, student loan repayments, and utility bills, you can then look at how much money is leftover.
You can allocate these extra funds as you see fit. Conducting a personal finance audit will give you a proper insight as to how much you can save in a monthly period or how much you can spend on discretionary goods and services.
Create a Budget
A lot of people don’t keep track of how they are spending money. While they may not think that they are spending much during the course of a month on unnecessary goods and services, the reality can be a lot different.
Those small purchases you regularly make in gas stations and convenience stores add up. You might be shocked as to just how much these types of random expenses add up at the end of the month or over the course of a year.
By creating a budget for certain types of spending, you can have a lot more control over your outgoings. One of the most important areas to focus your budget on will be spending on the likes of food and entertainment.
Once you know what specific sum you can spend, you will then be better able to have funds left over for other important outgoings. There also needs to be a level of discipline that means you will actually follow your budget. Otherwise, your efforts will often be in vain.
Fill Up an Emergency Fund
One of the most powerful tools to prepare you for unforeseen expenses is having an emergency fund. While this idea has been around for many years, people really saw the importance of having such a fund after the pandemic hit. Many people were able to fall back on their emergency savings during these tough periods.
Having quick access to cash in the case of an emergency is vital. It takes away a lot of additional stress that might otherwise be in place if you don’t have much money at your disposal. There are different schools of thought regarding how much you should have in an emergency fund. The general rule of thumb is that you have 3-6 months’ worth of living expenses built up and easily accessible.
Make Some Extra Cash
While a lot of articles you read about personal finance will talk about the different ways that you can save money, a lot of people overlook the benefits of focusing more on generating additional revenue. Of course, it is easier said than done. However, there are a lot of different gigs that people can try out in order to drum up some additional cash.
This money can help ease the burden of certain expenses and give you a bit more breathing room when managing your money. One of the popular ways to boost your income these days is forex trading.
Platforms such as Forex4you offer a lot of help to beginner traders. You can learn about all aspects of trading and get started in no time at all. The platform offers more than 150 different trading instruments, and runs on Metatrader4 as well as their own proprietary technology - Forex4you Mobile, Desktop, and Webtrader; providing traders witheasy multi-platform trading.
Forex Trading involves significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.
