Usually, if there are unforeseen situations (you need to pay for health insurance, urgent car repairs, etc.), and there is no money for material expenses, some people advise in such cases to either earn more or save more. This is reasonable advice. But bringing them to life takes not only a desire and knowledge of some techniques and technologies but also a little time.
What if the money is needed here and now? For such cases, there are special organizations that will help get quick money as soon as possible. But before asking for financial help, check loans for emergencies review and choose the best options. You are sure to find the right option for yourself using their services.
“It’s unfortunate how some people complain about being financially unstable, yet they use their last savings to acquire material things.” ― Edmond Mbiaka.
During a crisis, it is especially important to be careful with money. The emergency savings are running out quickly. Try to change financial habits, and your life will become happier. Running a family budget is not difficult, except unusual. But you have new opportunities: pay a loan faster or accumulate for a large purchase.
Emergency Savings: What a problem
Most citizens in the developed and economically stable United States spend their entire monthly income without a balance and do not keep savings, and this does not depend only on the COVID-19 pandemic. According to studies by Times magazine, 76% of Americans live from salary to salary. The reason for such apparent carelessness lies in the habit of living on credit.
If you look at other statistics, 41% of Americans could pay an amount of $1,000 if they could save. Data can be viewed below:
Using emergency savings is the easiest thing to do. And how to learn not to spend the accumulated money, but to multiply them, we will tell further.
How to Keep a Proper Record of Income and Expenses?
The most important thing is to lead it, no matter how. It could be:
- mobile application;
- Excel spreadsheet.
The main thing is to form a habit of regularly recording income and expenses.
The practice of recording expenses even before the purchase is made helps in establishing relations with its budget. You can open a notebook and get away with the idea that you have already spent everything you can. But it is much better to think in the store, and whether this purchase, especially unplanned, is actually needed — and to put this amount in a diary or application on the phone. This is sobering and often stops unnecessary spending.
“Savings, remember, is the prerequisite of investment.” ― Campbell McConnell.
Ways to Optimize Your Budget
To make the budget balanced and transparent, first of all, you need to analyze the costs and calculate what you spend money on monthly. So you will learn (or confirm assumptions) about major expense items, and understand how they can be optimized.
Most often, products become the main object of expenditure. It will be more correct to compile a list of necessary products and buy them in a hypermarket than to shop in a store at home every day, where the same goods often cost more. Some experts advise photographing the refrigerator before going to the store, so as not to buy extra.
1. Reduce Unnecessary Costs
After 2-3 months of recording expenses, you will begin to draw a picture of what you are spending. Analyze your spending structure and consider how much family money can be cut and how much more can be spent. If you have long wanted to spend less on driving, walking around bars, or eating meat, the analysis will help to re-evaluate your expenses.
2. Pay Your Bills on Time
If you forget to pay for utilities this month — next you will have to pay more, including a penalty. Miss the loan payment — the bank will issue a fine and charge a penalty for delay. All this means that your family will have less money for running costs.
3. Enjoy Discounts and Cashback
To make online purchases even more profitable for the family budget, use discounts, and cash back services. Subscribe to your favorite store mailings to stay up-to-date and sign up for a cashback service to return cash from each online payment. The cashback service works with many stores and sites, allowing you to return part of the money spent even from those purchases that have already been made at a discount.
Statistics: Adults aged 35 to 44 said that the biggest obstacle to savings is the subsistence minimum from salary to salary. (Source: Fortunly)
4. Draw up a Financial Plan
If you draw up a financial plan for the next 3-6 months, then it will be easier for you to cope with the upcoming expenses. Take into account seasonality — when autumn approaches — the costs of children’s school students increase, in winter — you need to “change” the car.
Calculate the budget for the day! Subtract from salary obligatory payments, utilities, deposits, expenses on food, transport. Divide this sum by the number of days in a month. It is the sum which you can spend every day. If you left a framework and spent more planned, the next day it is necessary to be pressed down in expenses.
5. Avoid Loans
In most cases, buying on credit is associated with an overpayment, which increases the total value. You overpay and purchase items you can’t afford. Exceptions: buying a car that will significantly increase your income, or a mortgage, the overpayment of which is lower than rental housing. In this case, you save by choosing a more profitable option and invest money correctly.
What Is a Financial Cushion and How to Create it?
Putting aside about 20 percent of income is considered the norm of a healthy budget. And then, as soon as the salary has been raised, it is necessary to additionally defer 50 percent of the amount of the increase. In this case, the standard of living increases: a person spends more money on himself, and accumulates more.
One of the popular tools is funded life insurance. Of course, you can also put aside a replenished deposit, and buy securities. The most important thing is self-discipline. If you regularly, every month do not save money, then it will not work out.
A financial cushion is a 3-6 of the amount of the family’s monthly expenses. This includes both credit and tax liabilities.
The sooner you start planning your family budget, the sooner you will teach yourself to joint financial discipline. Draw up a real financial budget, stick to it, and you will see how your financial life has improved. You will begin to have extra money with which you can invest in yourself and your children, and thus significantly increase income.