How to Take Control of Your Money in Uncertain Times
There are some things in life that are just beyond our control.
The situation with COVID-19 has sure taught us that.
It seems like almost overnight, unexpected circumstances like furloughs, job losses, and business closings have made goals like buying a house, sending a child to school, or taking an early retirement seem no longer within our control.
There is, however, something we can control during these and other uncertain times: our money.
Here are some ways to accomplish that:
1. Budget. Budgeting has always been the key to successful financial management; however, during the pandemic when you may have experienced a loss of income, it's absolutely critical. Take some time to review your expenses and look for ways to reduce them.
2. Build emergency savings. Life has always been unpredictable – even before COVID-19. We can never predict when we might encounter an unexpected expense or life event, like illness or job loss. The best way to financially prepare for the unexpected is to have an emergency fund. Saving even a few dollars a pay period can add up and give you the peace of mind you need.
3. Reduce credit card debt. Debt has unfortunately become a part of our lives. According to USA Today, the average American has over $6,200 in credit card debt. If you're among them, you'll want to focus on paying down that debt. To accomplish that, review the interest rates and balances you have and start paying down higher-interest debt first. Also, make be sure to pay more than the minimum payment due to reduce interest fees. You may also want to look into consolidating credit card debt with a balance transfer offer.
4. Look at other options for reducing other debt. If anything positive has come out of the pandemic, it's lower interest rates. That means now could be a good time to refinance your mortgage or to refinance higher-interest student loan debt.
5. Maintain good credit. The need to maintain strong credit will never change. Be sure to pay all your bills on time and to avoid using credit cards to pay for things you can't afford. If you're having difficulty making payments, notify your creditors immediately to work out payment plans.
In challenging times, it's easy to get overwhelmed and lose our focus, however, staying focused on your finances can help make your life a little more manageable – and get you back on track to meet those goals you had planned.