Three simple steps to financial security
There is no doubt that this period has been extremely difficult for those employed in your sector. It is very difficult to experience such a huge and unexpected change in your employment situation, resulting in a sudden reduction or complete stoppage of your income, especially for such a long period of time.
It’s essential to have a few things in place to survive any potential financial setbacks you may encounter again, for whatever reason.
Do you know exactly how much it costs to manage your life for a week, a month or a year? Don’t forget to strip those trips to Zara and the manicures! I’m referring to the actual number you need each month to afford the BASICS of your life – food, utilities, mortgage payments, etc.
You really need to know where you are starting from before you can plan where you are going. Most people are totally unaware of their exact expenses. Nailing this down is essential before moving on to the next step.
Once you know your numbers, you can move on to the emergency fund. Since you had none, NOW is the time to deal with it. It’s the fund that’s essential to avoid the total panic of “Will I be okay?” if your employment situation suddenly changes again.
An emergency fund is essential for financial support in times of uncertainty. You should have at least three months of your basic financial obligations in this fund. It will make the difference between a tough time and a life-changing time if you find yourself out of work again.
Start small and increase until you are comfortable.
It is also very important to place this emergency money in a dedicated and separate bank account, away from your everyday funds.
If you’re in debt, stick to the minimum repayments for now and save that money until you’ve replenished the emergency fund.
No one wants to hear the word “budget,” but a good spending plan (which includes your basic and discretionary spending) will let you know when you need to put spending on hold so you can start saving excess money.
For a few months, try to spend only on your basic expenses and eliminate all non-essential expenses. Review your recent credit card bills and try to identify subscriptions and other expenses that you can completely cut to free up more cash.
So there you have it, three practical tips for securing your finances now so that, if something unexpected happens again, you have peace of mind knowing what your numbers are, having an emergency fund in place, and sticking to your budget.
You will get through this and it is very important not to let the fear of what the future holds blind you and bring you down.
If you would like further advice on your specific situation, you should contact a financial adviser.