Achieving sound financial health is a challenging task for many people across the country. And with the COVID-19 pandemic, the challenge increases due to the uncertainty of the economy. Even if some people’s finances were left unscathed by the crisis, the high inflation rate would reduce their purchasing power if the situation does not improve soon.
Despite these difficulties, you can still achieve stable financial health even in these trying times. You should focus on achieving good financial health by taking the following tips into account:
Establish Clear Financial Objectives
The first thing you should do is to set clear financial objectives to help you maintain your focus. Even though these objectives depend on your current financial situation, your goals should be specific, measurable, and achievable. Your financial objectives should also be sensible and have a specific timeframe.
Without an objective or plan, you will end up spending more than you should. And in this situation, it will be challenging to achieve the stable financial health that you aim to accomplish. Your goals can include paying off loans, increasing income, or setting aside an emergency fund. You should focus on your objectives to ensure you achieve them despite the challenges caused by the health crisis.
Differentiate Needs from Wants
It’s also vital to differentiate needs from wants. While there are instances that it can be challenging to distinguish them, you must think it through to avoid making unnecessary expenses. This is particularly true when you have a tight budget.
Even if you do not have a tight budget, differentiating needs from wants is still essential. It allows you to save extra funds for a rainy day. You should create a budget and stick to it. If possible, you should also find ways to reduce your expenses to increase savings.
Among the wants that you should consider removing from the list of expenses are subscriptions that you do not use often. You should also reduce your online shopping expenses, especially if the items you aim to buy are not necessary. On the other hand, the needs that you should include in the budget are insurance premiums, mortgage expenses, and utility bills. You should also make sure your budget allows them to live comfortably to reduce your anxiety due to the pandemic.
Creating a budget allows you to differentiate your needs from your wants. It also allows them to set aside funds for your savings. Increasing savings is important since the economic situation remains uncertain due to the continuing danger caused by the pandemic.
When news of the latest variant of the virus came out, stock prices went down due to fears of the economic fallout that the variant would cause. You should make sure you have funds to cover around six months’ worth of expenses. Say you have more than six months’ worth of emergency funds. You should consider putting the extra find into a certificate of deposit (CD) since this offers better interest rates than a traditional savings account. A CD also has a lower risk than investing the funds in the stock market, as shown by the recent decrease in prices of stocks. Increasing savings also requires you to avoid eating out.
Aside from saving money, staying home also allows them to avoid getting infected if a more transmissible variant enters the country. You should also cancel subscriptions that you do not use and pay off your credit card balances every month.
Follow a Minimalist Lifestyle
Following a minimalist lifestyle also helps you save money since you do not need to spend a lot. It also helps your mental health since a minimalist lifestyle requires decluttering the house. You also have to focus on your needs and reduce spending on your wants.
A minimalist lifestyle also encourages you to stick to your budget. And the budget should only include the things you need in the house. So you should avoid making large purchases that are unnecessary at this time.
Protect Your Retirement Fund
Setting aside emergency funds also allows you to protect your retirement fund. You should find ways to avoid dipping into this fund even if your budget is tight. When you make the mistake of using part of the funds, it will affect your future financial health.
Aside from protecting your retirement fund, you should also look for a company that offers reliable investment advisory services. These companies can help increase your investment by responding to changes in the market. They should also reduce risks while helping achieve their clients’ financial goals.
Taking care of your financial health is essential during the pandemic. So, you should find ways to reduce expenses and increase savings to stay financially healthy.