Tough economic times affect us all; unfortunately, some people appear to suffer more than others. The good news, you do not have to wait until you hit rock bottom to put your act together. You put advance measures in place to ride the tide and prepare for uncertainties. This article highlights some of these areas.
1. RECORD, TRACK AND PLAN
Treating any ailment with any medicine that comes your way is self-defeating and injurious. This outlook applies to personal finance too. Just like you don’t use any treatment for ailments, the try-and-error method does not belong with money. You diagnose economic challenges using the proven method of record keeping – plan and track. A record gives you an indication of the choices you make with money.
You acknowledge the value of your money by creating a transaction log. The log should contain two columns; income and expenditure. It also shows you how much you earn and where it goes afterwards. A well-read transaction log transitions you into budget preparation. For the sole purpose of learning, let’s baptise the budget as a plan(here’s the reason). A well-prepared plan reveals your earning power and spending patterns. As you move on, you meet cash flow – the lifeblood of financial wellness.
Prepare a summary of your assets (home, investments, and the likes) and liabilities (debts); this gives you an idea of what you own and what you owe. This summary helps you identify the resources at your disposal and will help you to face future obligations.
Tip: These are the times when an emergency fund shows off its muscle – its core function is to give relief during tough economic times.
2. STAY INSURED
Imagine paying twice for the most expensive item you have ever purchased amid a poor economy! Is it even possible? Yes, if you have insured it. Regularly review your insurance policies to make sure you have adequate, but not excessive, coverage in the following areas; Healthcare, Life, Accidents, Assets and Professional Liability. Tip: you are the greatest income-generating asset in your financial plan.
Headsup: If your insurance is up to date, you do not have to worry during tough economic times.
3. CONTINUE SERVICING YOUR DEBT
Prepare a summary of your loans and any other obligations. Review your payment schedules to ensure that you can meet these obligations comfortably. Recheck your loan status to determine your capacity to repay any future borrowing. Use the snowball debt method to clear multiple debts – ideal when designed as a goal. Tough economic times do not last forever. If in a position, keep your repayments up to date. Failure to do so may compromise your long-term freedom.
4. STAY IN TOUCH WITH YOUR INVESTMENTS
Ensure that your investments are appropriate in relation to current and expected economic and market conditions. While at it, check your asset mix ratios (diversification). Your asset classification addresses; liquidity and risk/return trade-off. Know your tenures inside out. Stay informed about market conditions and the current effect on your portfolio.
5. TAX PLANNING
Acquaint yourself with the country’s tax regime. Learn about tax-saving techniques and how you can benefit from them. Maximise on high-value deductions that offer tax deductibles and reliefs. Stay abreast with changes in tax regulations – evaluate how the changes affect your savings and investments.
6. RETIREMENT PLANNING & PLANNING FOR RETIREMENT
Adding to your investments routinely is the surest way to build up your wealth. Continue contributing to your retirement plans. Prepare a retirement projection to identify any necessary changes. Work with a financial adviser to help you see the bigger picture.
7. A BONUS
If you devote some time to reviewing these matters, you will be in a much better position to deal with the present or future problems relating to the extended economic crisis. In addition, your financial situation will be on track to thrive when the economic outlook improves. Share this information with your loved ones.
