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.