The current uncertainty in the global economy because of the health crisis, has led to some volatility in the financial markets. Even if you are quite savvy with your money, it can make you feel a little unsure and perhaps a little uneasy. You, of course, are not able to control what happens to the prices of stocks or real estate, but one thing that you can do is to control your own finances. Keeping on top of your finances and carrying on with some savvy decisions can help you to make sure that your money is managed well, and lead to some security, no matter what is going on in the economy.
Create a Financial Safety Net
One of the things that you can do to best protect your finances is to make sure that you have an emergency fund to dip into, if something does happen when you’re out of work, or in some other financial hardship. Having some cash in a safe place, such as a bank account, can be the exact financial safety net that you need to have. This should be something that you’re always striving for, not just in a global pandemic. It can be tempting to invest any emergency money that you have, but when you need it, it could be at its lowest point, which would be a waste. So put aside that safety net, and then you’ll always have it.
If you don’t have a fund for emergencies yet, then it is not too late. It is a good idea to build up a fund of what you’d need for at least three months, but up to six months ideally. Think of what you’d need for living costs, as well as debt payments, or other payments. Starting small is a good idea, especially if you don’t feel like you have much spare at the moment. It is something that is definitely worth the effort.
Make the Most of Your Debt
One of the next things that you could be looking at, during an uncertain time like we are facing, is to think about optimizing, or making the most of your debt. If you have some debts, then you don’t want to be paying more for it than you really need to. If you can make your debt cost less for you, then it will help to free up some extra cash. Because of the global pandemic, interest rates are at an all-time low. So it can be the time to make the most of it, if you have a mortgage, loan, or credit card debts. You could also try some of the following:
- Loan refinancing means that you will pay off an old loan with a new loan. When the interest rate is low, it can be the perfect time to do something like this. Of course, with something like this it does come with some fees, so you have to think about what those would be, and it is going to be worth it so that you can actually see the benefit of refinancing.
- Loan modification is where your loan is modified because of a massive difference with your income. If you aren’t working right now but have a mortgage to py, for example, then you could speak to your lender about modifying it all, so you can pay back what you can pay, even if it is temporarily less than normal.
- A balance transfer is where you use a different credit card with a balance transfer option to pay off any debts that you have that come with high interest. Moving it onto a lower interest card, or a zero interest card, even if for only twelve months or so, can give you some respite to get on top of what you owe, without accruing any interest.
Diversify Your Investments
Diversifying what you invest in is a simple way to manage your money, as well as manage your risk by spreading it out over different investments. All of the risk isn’t in one basket, so to speak, which can help, especially during uncertain times like we are experiencing. Look out for varied assets, that are not related to each other. Such as stocks, cash, bonds, real estate, and perhaps other commodities. The reason being is that they are all going to respond differently to the same conditions, so it is wise to spread your bets. Investing internationally could also be a good way to limit how much you could potentially lose, and perhaps help with higher returns overall.
If you’re looking for a platform to trade one, then it can be a good idea to check out some reviews online. For example, AvaTrade is a popular platform, but looking up an AvaTrade review is going to help you to see if it will work for you, and for what you want to invest in. On a slightly different note, if you want to vary what you do, think about investing in your own business, if you have one, as well as in real estate. It can be a good way to diversify, as well as build up your finances.
Simplify Your Life
If you want to build up your wealth, then you need to have some income that is leftover at the end of each month, before you get paid again. If you aren’t currently at that point, then it is time to think about your life and where you could cut down some costs. If you reduce how much you spend each month, then it will mean that you can build up an emergency fund, and have a bit of a cushion to fall back on if you need to. If investing is your thing, then you’ll have more to invest with.
One of the first things to do if you want to reduce your spend and simplify your life, is to keep track of all of your expenses, to see where the big money is going. The good news is that in uncertain times like we are currently facing, you are likely to be spending less anyway, as you’re home much more and can’t go out to bars, shops, restaurants, or the gym as you have in the past. This can automatically cut your spending, so it can be a good time to start to track your spending. Taking steps to spend less and simplify things can make a big impact, and help you to get the financial security that you need.
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