The year 2020 came in not just with a bang, but with a jab and a punch to boot. This year has brought with it a global health crisis as well as political challenges that have immensely affected the world economy. Many people have experienced their first major financial crisis due to the emergence of essential vs. non-essential services or jobs.
Several companies have laid off employees, and numerous small and medium enterprises had to temporarily shut down or close and file for bankruptcy altogether. As a result, a lot of people experienced unexpected impoverishment, while some experienced unforeseen medical emergencies this year that might have led to crushing debt.
All of a sudden, this year is already halfway through, and yet the battles are not over. The whole world is reeling from the impact of a global crisis, and everyone is fending to stay afloat or survive. So here is a compilation of the best tips from maximizing savings, finding online payday loans, creating sources of income, and budgeting, among others, to overcome financial crisis in 2020 so that you are in battle gear to soldier on this year:
Tune out the noise and identify the problem
First things first, take care of your physical, mental, and emotional health. A financial crisis can make somebody act out of emotions and not out of reason. Stay on top of things by listening to reliable information, but do some self-care, and do not self-sabotage by reading or listening to too much upsetting political or economic news. Consider taking breaks from reading or watching the news about the political and health situation, and financial markets.
The current financial situation has resulted in too much market volatility, which is why many people are panicking upon seeing irrational movements in their investments or stocks. Panicking will only lead to more sleepless nights and intense anxiety; thus, the disintegration of your mental and physical health. So do yourself a favor, and try to relax.
On the other hand, some people have been hit by a crisis due to medical emergencies, loss of jobs, or loss of sources of income. This means that your financial problems might indicate that there are even more significant issues to tackle. Identify the real reason behind your financial woes in order to come up not just with a Band-Aid solution but a more permanent one.
Maximize liquid savings while finding more ways to save
Cash and check savings, as well as other short-term government investments, are the ones you can rely on in a financial crisis because their value is not as volatile as other financial instruments. You can use this money during a difficult time without the burden of incurring a monetary loss or tax penalties, and so on.
Avoid too much risk in a crisis until you are secure with your liquidity, and that you have several months’ worth of cash savings. It is smart to prepare for a 3-month cushion, but a 6-month to a one-year buffer is even better.
Since this year has put everyone on survival mode, one has to check whether there are unnecessary expenses that can be cut back for the next few months. If there are expenses you can do without, do some cost-cutting, and this is one way to save. Business owners may also identify some ways to tighten the belt and save up to improve financial security.
Seek financial assistance or small business funding
A significant loss of your income can be very unsettling and even terrifying. So if there are financial assistance programs that you qualify for, grab the chance. Also, employees may want to look into online payday loans, with quick applications and small interest rates to mitigate expenses during the financial crisis.
Entrepreneurs for small and medium enterprises are also bearing the brunt of the financial crisis of 2020, and some have started to bounce back while some could not recover at all. At a time of economic crisis, it is an opportune time to research potential small business funding that you may also apply for eventually. Research all viable options that may be availed for the alleviation of difficult financial situations.
Make a budget and prepare for an emergency fund
Making a budget will give you an overview of how much you need for a month or so. This will also give you an idea which among your usual expenses are necessary and which are not. Therefore, you can determine how you can save. Once you keep a budget, you will understand if you are spending below your means or perhaps overextending.
Moreover, if you have a budget, you will know how much to allocate for emergency funds. A constant allocation for your emergency fund, even while there is a crisis, is essential as emergencies prop up unexpectedly. The global crisis is crippling the world at unprecedented rates making budgets and emergency funds vital.
Create new income streams
A crisis may get your spirits down, but remember that this is not the first significant financial challenge that the world has experienced, nor will it be the last. Do not let job worries consume you too. Instead, turn this crisis into an opportunity. Use this time to find ways on how to create new income streams on the side. Sometimes, a side-hustle earns more than a usual 8 to 5 job. So, if you are one of those whose source of bread and butter has been affected by the financial crisis, search for income sources that require your set of skills or credentials. Side-hustles are pivotal in a time like this because they can help mitigate financial burdens.
One of the trends at present is offline jobs or businesses being transformed into online income sources. Online enterprises can be one of your new income streams. Once you hurdle all the logistical concerns through planning and preparations, earning extra incomes to help overcome this financial crisis is not too implausible.
Review bills and debt
Closely monitoring your bills will help you identify how not to waste money in late fees, penalties, and other finance charges. Being diligent in monitoring can save you a lot of money, especially in your monthly bills. Apart from this, debt settlement and reviewing of accounts are essential to determine your current cash status. You will be able to sleep soundly at night when there is not much to settle and when you can save money from reviewing your bills.
To be on top of things when it comes to your accounts, you have to compile a list and keep track. People tend to ignore this, but in a financial crisis, settling debts using your savings or money that comes in as income must be done smartly. Prioritize as much as you can because incomes may be quite insecure at present.
Lastly, if your debt includes credit card debt, making it a point to pay off your credit card obligations can significantly free up your financial burdens or liabilities. These debts usually take up much of your monthly budgets, so getting rid of the interest fees may alleviate some of your budget concerns. Also, if you can transfer your credit card balance to another card with lower interest charges, you may pay the total debt quicker.