Money Saving Tips
The pandemic has changed our money habits. So far in 2020 is it safe so that we have partially adopted the new normal into our lives. We do not often meet our friends or family now, we avoid going to crowded places like concerts, bars, or stadiums. But we address a drastic difference in the world of business as many employees are facing a reduction in salary or even losing their job. So a lot has changed since the pandemic began which ultimately influenced our financial life and money management. Here are 7 money management tips for all including entrepreneurs and business owners in 2020:
1. Start with End in the mind!
By far facing the coronavirus has made us realize that we need an adequate plan for money management. The initial phase of planning should include an investment plan, knowing the expenses, budgeting, and consideration of emergency funds.
Set up a budget on how you are going to spend on expenses and manage to save money from it. You have to start money management by keeping in mind your retirement plans, debts to be paid, or maybe pay kid’s education fees if you are a parent. You should enhance proper planning to become debt free this year. Therefore having your financial plan is a must.
2. Embrace the process of Smart Investment
You should know what you’re investing in and have an analysis to get the returns you expect. 2020 is the most crucial time to be in contact with your financial advisor and ensure that financial goals are right on track. The right answer for when to start investing is… yesterday! Well but it’s never late investing today is always better than investing tomorrow.
Initially, you should start with opening an investment account, it is always advisable to take the help of an expert financial advisor in doing so. A smart long term investment option right now is to invest your money in gold as we have addressed major fluctuations in the stock market this year. Unless you are deeply cursed with knowledge of the stock market don’t go for it. A financial advisor has a better understanding of investment plans based on your current lifestyle and expenses. Investing without thinking of long term scenarios is a common mistake.
3. Don’t let go of the Pandemic Money Habits
We all have said “no” to certain money consuming things like hangouts, exercising in the gym, eating junk food, etc. We never imagined life without these things but surprisingly we have learned to live without them. Well, the new normal doesn’t entirely save your money, there are some sectors where you need to invest more like internet charge, life insurance to protect you & your family down the line.
Due to the quarantine life and avoiding meets we are entertaining ourselves at home by premium membership of media services providers. A money-saving tip here is to pay premium membership annually rather than month to month. Reading books could be another valuable option to pass time. You should not let go of these pandemic money habits as it has taught us the difference between “want” and “need” in terms of budget allocation.
So simply avoiding things that don’t align with your values or your budget will help in money management.
4. Risk Tolerance: Income vs Expenses
Income is the biggest factor to establish your risk tolerance. If you are earning well and didn’t face any pay cut during the crisis then you might not hesitate to take high risks. But conversely, if your business has faced a downfall due to the 2020 crisis or if you faced a cut in your income such setbacks may reduce your risk tolerance.
Your expenses also influence the risk tolerance factor as how much to invest is highly influenced by the budget you allocated for emergency funds and how much money you save after spending on your expenses. You may have a high income but if your outgos are also equally high then it will discourage you from making a high-risk investment.
5. Be Solicitous about “Cash Reserve” for Business
Financial management is an essential ingredient in all commercial activities in a market economy. For unexpected financial turns in the business, the owner’s aim should be to have 12-18 months of cash in the business. Business funding can help to tackle some of this uncertainty. Before the pandemic bootstrapping was a considerably good option for funding your own business.
In bootstrapping, business owners may have the best intentions in using personal money to fund business. But looking at the current scenario of COVID bootstrapping or self-funding won’t be a recommended option as every individual might require emergency money for a medical crisis. So instead, owners should look for potential investors for the uncertainty caused during the crisis. You have to understand ins and outs of pitching your business idea to investors, this is necessary to get funding during these tough times.
In short, being solicitous about cash reserved for business and not risking your personal savings will help you to survive in 2020.
6. Take a Good Care of your Piggy Bank
How often at the start of the month you decide to save some amount of money but unfortunately the plan is ruined by an unexpected expense. Well, everything is never under control but a sensible option here could be opening a recurring bank account. In a recurring bank account, a fixed amount of money will be deposited automatically every month. Set a time to check the deposit each month.
Nowadays, it is practically difficult to resist tempting online sales on shopping sites and e-carts. One irresistible display ad on your smartphone is enough to break your saving rule. So sticking to your budget and taking care of your piggy bank is a vital step towards money management.
7. Stay Motivate and Relax
2020 has just not been hard on you. People have been emotionally as well as financially affected by the pandemic. Money management might be stressful sometimes so take some time off for yourself, and spend some time sharpening your hobbies. Add some valuable skills like public speaking but in 2020 public speaking simply implies hosting webinars and online meetings.
In a money management journey, mistakes will be made and that’s okay, learn from your mistake and come out stronger!