Even a casual glance at the headlines will tell you we’re living in especially uncertain times. But don’t lose hope. There are ways to thrive, even in times like these. (See also: Emergency Plan: Better Than an Emergency Fund)
Psychologists say feeling in control is one of the essential wellsprings of mental health. We can’t control wars, the weather, or Wall Street, but there’s much that we can control, so that’s the place to focus.
How do you feel about the idea of using a budget? Excited? Happy?
I didn’t think so.
Non-budgeters use words like “restrictive,” “rigid,” and “constraining” to describe budgets. However, people who actually use one say a budget helps them feel “in charge” of their money and that it keeps them “in a position of knowledge and control.”
Especially when times are uncertain, it feels good to be on top of where your money is going each month.
As explained in my Budget Quick Start Guide, there are four steps to using a budget:
Estimate where your money is now goingDevelop a plan for how your money could be used more effectively (see the Recommended Spending Guidelines for different size households and different incomes at the previous link)Track your use of moneyAnalyze where your money actually went at the end of each month and make any necessary adjustments.If you don’t currently use a budget, give it a try. You’ll soon find yourself feeling much more in control of your finances.
Even in good times, life is filled with uncertainties. Unexpectedly expensive medical issues, home or vehicle repairs, and more can pop up at a moment’s notice. The people who are best prepared are those with an emergency fund, preferably stocked with six months’ worth of living expenses.
If that sounds like a lot, just start where you can. Open a separate savings account. Then set up an automatic transfer each month from your checking account to this savings account. Start with $25 a month if that’s all you can afford. The key is to start.
If you have any debt other than a reasonable mortgage, build an emergency fund totaling one month’s worth of essential living expenses and then get focused on getting out of debt. If you’re already out of debt, build your emergency fund up to six months’ worth of essential living expenses.
If you’re carrying a balance on a credit card, commit today to stop going any further into debt. Take your credit cards out of your wallet or purse so they’re not with you when you go shopping. Cut them up, or put them in a block of ice if you have to. Do whatever it takes to make it make it as difficult as possible to take on any more debt.
Next, fix your payments. An important thing to know about credit card debt is that if you stop going any further into debt and you make the minimum payments required by your credit card company each month, then each month you’ll be required to pay less and less.
It isn’t kindness on the part of the credit card company; it’s math. Your minimum required payment is based on a percentage of your balance. So if your balance is going down a little each month, so will your required minimum payment.
Making this declining minimum payment will keep you in debt for approximately…forever! However, if you simply pay the same fixed amount each month, you’ll really speed up the process of getting out of debt.
Even better, see if you can pay more than the fixed minimum.
There’s no such thing as guaranteed employment anymore, but keeping your skills on the leading edge will go a long way toward staying as employable as possible. If your employer offers tuition reimbursement, pick up a night class in your field. At very least, make sure you're reading the latest books and leading blogs in your field.
In uncertain times, it’s natural to narrow our focus, thinking mostly about our own needs and even becoming fearful. Regularly contributing some money to a cause or organization we believe in can go a long way toward getting us out of those ruts. Giving money away takes our focus off ourselves, keeps us mindful of other people’s needs, and makes us feels good to be part of something bigger than ourselves.
What other steps are you taking to thrive during uncertain times?
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