Over recent months, life has drastically changed all around the world. The health emergency has raised concern around the globe, desolating our social life, work, and even source of livelihood. The economy deteriorated, jobs came into a halt, and many lives were lost. There are financial tips we wish we knew before this crisis started.
For those on a shoestring budget, you might be wondering how your financial situation could have been different if only you didn’t take for granted the opportunities you were handed then. Most of us wouldn’t have realized the importance of financial tips and saving money the easy way. Indeed, this crisis dispensed its fair share of financial lessons.
The point, however, is not to dwell on your past mistakes. Nobody saw it coming. But now that we are in the middle of a crisis, it would be best to start anew with your monetary habits— once everything goes back to normal. There are financial tips that can help you with that.
Read: 6 Ways to Keep a Healthy Mindset During Uncertain Times
1. Don’t let overconfidence influence your decision making
Overconfidence is a perceptive bias that affects our decision making. Take Pearl Harbor for example. The American military was overconfident that Pearl Harbor was immune to attack—only to be surprisedly struck by the Imperial Japanese Navy Air Service.
This goes the same for financial matters. When we are overconfident, we tend to make poor decisions—splurging money, accumulating debt, and whatnot. It’s important to remember that just because we are confident, doesn’t mean we’re always right. Don’t confuse determination with overconfidence.
2. Build an emergency fund
This financial tip is extremely useful for emergencies including pandemics, unforeseen medical expenses, and unemployment. Emergency funds make a financial buffer in times of emergency without having to rely on loans and credit cards. Therefore, it would help you avoid borrowing more if you have debt.
Just an extra financial tip for you: in order to build an emergency fund, you need to calculate the total amount of money you want to save. Set a monthly goal; you can do this by automatically transferring funds to your savings account whenever you get paid. Lastly, save your tax refund to boost your emergency stash.
You can use an emergency fund calculator for a precise and realistic goal.
Read: Best Accounting Software for Small Businesses (Paid and Free)
3. Save for retirement
There’s nothing wrong with saving for retirement even at an early age. If anything, this financial tip will come in handy considering how we live in a world of uncertainty. While saving for retirement might not be exciting, it will give you more control over your lifestyle down the road.
Relying on social security benefits alone is not enough. It’s important that you anticipate major life events, like medical needs and changing factor needs. These factors can increase quickly especially when you factor in inflation.
4. Develop multiple streams of income
If there’s anything that this crisis has taught us, it’s that no job is safe. If your only source of income is from your day job, time will come that you will find yourself in serious financial trouble.
Luckily, the emerging technology has made it possible to establish a secure living from the comfort of your home. There are thousands of opportunities for those who want to kickstart an online business.
Read: 10 Best Ways to Make Money From Home
5. Be generous
Most importantly, this crisis has taught us a humane and financial tip that we should always keep in mind— being generous. We’ve seen the impact of good deeds to our neighbors and community. We may regret past unnecessary purchases, but we rarely regret generosity.
Generosity should be on top of our priority. After all, it comes in different shapes and sizes. You don’t have to be financially wealthy to be open-handed; all you need is the desire to help and the heart to make it happen.
I hope that these financial tips can help you in the future. We may be going through to a rough patch due to this pandemic, but we must always face these days head-on and fully equipped with these financial tips we’ve learned.