In times of uncertainty, it is easy to get overwhelmed. Controlling your cash flow is the best tool most of us have for dealing with financial instability and uncertainty.
Here are a few concrete moves we can make to protect ourselves financially.
1. Revisit Your Budget
Now is the time to review your budget and reduce any unnecessary costs. Be sure to track your expenses so you are mindful of your cash flow and your choices. Reducing expenses where you can helps you to be able to stretch any available funds/reserves. Being intentional with your spending now can mean you preserve cash for the things that are truly important to you. Instead of overspending on non-essentials now and having to make major changes later.
To help you save money, it is important to understand your spending triggers. Consider what exactly makes you spend money. Is it being hungry and too tired to cook? Develop a meal plan. Meal planning can be key to keeping us healthy and cutting our food budgets. We all have ways to cut our spending and preserve cash. It is time to get clear on a budget and get back to basic smart money habits.
2. Take Stock of Your Reserves
Once you cut down on some discretionary spending in the short term, make sure you move any cash flow you free up to savings. Ideally, you should have an emergency fund that provides enough cash for a few months of living expenses. If you do not have one at all, set a goal to amass at least $1,000 in cash. From there, look to save three (3) to six (6) months’ worth of expenses as a cash reserve.
However, whether you have one or not, now is the time to assess what cash reserves you do have available and how to access them (if the need arises).
3. Plan for the Future
Even in the midst of uncertainty, there is opportunity. This crisis has shown us the importance of having emergency funds and multiples streams of income. It is more important now than ever to prioritise your financial health and improve future financial habits.
If you do not currently have a financial plan, build one. An easy and quick way to get organized and build a financial plan is to start with a SWOT analysis and identify your strengths, weaknesses, opportunities and threats.
If you have always wanted to pursue a passion or start a side hustle, there is no better time than the present. Take the extra time, even just 30 minutes a day, to start researching it and taking action.
Uncertainty, especially related to our finances, can be very scary. It is okay to feel overwhelmed or afraid. But remember the power you do have to take action. With patience, compassion, and mindfulness, you can come out the other side with healthier money habits and a success mindset.
