With inflation at its high and a recession looming large, it is high time to take stock of your investments, debts and save wisely to secure the future and improve your financial health.
Here are a few habits that can help us sail through a rough financial patch:
Take stock on income; plan your finances
For those who have an income, it is important to plan your finances and analyze how much you keep aside for spending and saving from your total income.
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Many financial experts advise to follow the 50/30/20 rule, meaning keep 50 per cent of your income aside for life essentials like rent and food; 30per cent for discretionary spending and not less than 20 per cent for savings.
Budgeting
The price fluctuation in the market can impact your spending, most likely force you to shell out more if you don’t limit your spending to a personal budget.
Keep an emergency fund ready for a rainy day and limit your spending to what you need instead of what you want. Try to save at least three to six months of your monthly income to take care of your basic expenses in the event of a financial crisis. Save the fund in a separate account for easy accessibility.
Cut down on unnecessary expenses
Try to cut down on things that you don’t need, but buy anyway. This will not only help you save money, but also help you adapt to a different lifestyle when recession hits.
Living on a tight budget may sound scary, but it is not. Small changes in life like avoiding ordering food from outside and cooking the same things at home, mending essentials instead of buying new ones and avoiding stocking up on clothes you are not sure of or will never wear more than twice, are conscious choices that can help us increase our savings.
Save surplus cash
Make it a habit to wisely save the cash which you earn by cutting down on expenditures or trimming your budget.
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It is important to save it fast and in the right medium, to reap the maximum profits and reach your financial goal.
One of the best way to know how to save your money efficiently is by taking online courses on personal finance which will help you in taking the right decisions.
Settle debts
Try to settle your credit card debts if possible as rising interest rates can add to your debts. In case you are a long-time cardholder with a positive payment history, you can also negotiate with your credit card company to give you a lower interest rate.