Managing One's Finances within the Pandemic-The Panagora Blog

 

With lowering worldwide consumer demands, rising debt levels, fluctuating markets and dropping oil prices, increase in electricity tariff locally, deregulation of the Nigerian downstream oil sector with resultant effect of increasing fuel prices, the resultant pressure on Naira as a trading currency leading to its devaluation and so on. Having some money management/savings tips under your belt could be a lifesaver so that that when the worse happens, you’ll know how to survive a recession.

Sad to say, a recession is something beyond our control, but what we can control is how we prepare and respond to a financial recession. With the daily reality of a cost push inflation, embracing precautionary measures to protect your finances can make a world of difference, so before the next financial downturn hits, make sure you take some – or all – of these steps to recession proof your finances.

Mind you, there is no other time to get a better handle on how you manage your finances than now. Here are some steps you can take to build better money management skills.

MAKE A BUDGET AND STICK TO IT

Gaining control of your finances starts with a solid budget. A budget is an estimate of your income and expenditure over a given amount of time.

One easy way to start managing your money with budgeting is by using your payment stubs or bank statements to figure out how much money you have coming in and going out each month. Then track your spending over the next month, doing your best to make sure that your monthly expenses are less than your income. The extra money left over in your budget can be used to create a nest egg or start paying down your debts more aggressively.

AVOID UNNECESSARY SPENDING

Downsizing and learning how to live frugally can be a great strategy in a time with looming recession, because if you can learn to make do with less, you’ll increase your savings and you won’t find yourself struggling to adapt to a new lifestyle when recession hits.Living frugally isn’t as difficult as it sounds, and contrary to popular opinion, a frugal lifestyle isn’t about pinching pennies and depriving yourself of things that bring you joy. Rather, it’s about making conscious spending choices that reduces expenses, with minimal impact on your lifestyle. e.g. instead of buying a car with high fuel consumption rather go for fuel efficient ones, you can also scale back on your data plans by reducing the amount of online activities which are not really necessary etc.

SET AMBITIOUS FINANCIAL GOALS

While sticking to a budget puts you in the driver’s seat with regard to your money, having financial goals gives you direction. Do you hope to own a house, get out of debt, or retire someday? You can take steps now and prioritize your money management skills to make those things a possibility down the road.

Creating a savings account to save up for a down payment on a house, or opening a retirement savings account with a choice Pension Fund Administrator to save for retirement can lead to a huge payoff later in life. Write down your goals and return to them frequently to check your progress, celebrate successes, and re-prioritize to accommodate your shifting needs.

SAVE AN EMERGENCY FUND

This is money set aside for precautionary reasons. It’s crucial to note that before you start tackling any big financial goal, you need to make sure you have money socked away for unexpected expenses like medical bills, car repairs, or a sudden loss of employment. In other words, you need an emergency fund.

It’s not always advisable to settle emergencies with credit cards or personal loan as this turns your momentary setback into long-term financial burden. Having an emergency fund can ensure that unexpected expenses don’t end up plunging you further into debt.

A general rule of thumb is to set aside 3 to 6 months’ worth of expenses. Luckily, there are many ways to start building an emergency fund, even on a lean budget. Think through what works best for you.

DIVERSIFY YOUR INCOME AND INVESTMENTS

Most of us are familiar with the saying “don’t put all your eggs in one basket,” and this adage could be applied to your source of income. Relying solely on a particular job for all your income has inherent risk, because if the economy tanks and you lose your job, you’ll also lose your only income and your ability to meet all your financial obligations.

Having multiple streams of income can really help. If one income source starts to dwindle – or gets eliminated completely – you have other sources to fall back on to help keep you afloat.

To diversify your income, it’s also important to diversify your investments. If you have most of your money tied up in stock market investments, an economic downturn could be a financial disaster if all your money is tied up in one type of investment. And it’s for this reason that diversifying your investments is key.

Go through your investment portfolio and make sure your investments are spread out across different industries and even different types of assets so that when the market tumbles, your investments won’t be as affected and your losses won’t be as deep.

TAKE YOUR SPOUSE OR PARTNER ALONG

If you’re married or in a partnership where you share money, then you need to work together. Research has shown that one of the biggest conflicts in relationships is money! So, it’s important that both you and your partner get on the same page about your financial goals.Sit down together and make your budget. Meet with a financial adviser so you can learn how to invest your money wisely. But if nothing else, you need to make sure that the two of you have the same goal and vision. And that you actually stick to it!

KNOW WHEN TO GET HELP

It’s imperative for you to know when to get help during trying times as we are, particularly if you have accumulated debts.

If your financial situation seems like it’s getting out of control and is too much for you to handle even with a battery of money management skills, that’s ok. There are many reasons a person’s finances could spiral out of control, so don’t be ashamed to ask for help.

Financing living expenses with interest yielding loan is a problem to many Nigerians as under or unemployment, the harsh business environment and so on has made many fall short of proper living standards.Meanwhile, in some other part of the world like the USA, credit card debt in particular is a problem for millions… while Luckily, there are many resources to help you manage and pay down your credit card debt, including do-it-yourself debt payoff methods, or getting help from debt professionals through credit counseling or debt settlement.

The reality of the times has come upon all of us and we all need to be proactive in getting ready for whatever might come our way as relating to our finances in the near future. You can start with what you have. Above all, don’t give in to fear and anxiety as this may lead into depression. Be optimistic and courageous, keep honing your skills in preparation for near future opportunities. Every thing is soon back to normal and even better!

On this note, let’s leave you with a quote from Robert Harold Schuller; “Tough times never last but tough people do”. Remain inspired.