9 tips on How to Solve Your Financial Problems
We all have financial problems of different scales and at different levels. How to solve them is the big question. We are going through step-by-step instructions on what you can do to solve the problems.
Crisis’s, recessions and all similar situations only prove that as soon as one door closes another one opens. Recessions are always full of opportunities. These 9 steps I am sharing here are simple and easy to follow.
Step number 1: Change your mentality from the panicky mode to the opportunity seeker mode. Try to have a less stress-free life by doing some sports, taking the right diet, maybe some jogging or meditation, or taking some yoga class, depending on your lifestyle. Whatever helps counts. The easiest ones are meditation, yoga and some exercises that are easily managed from home.
Step number 2: Take control of your expense. This is super important for those who have a family and live in the same household. Pay close attention to what expenses you have and what are unnecessary.
Step number 3: Optimize your expense. Family living expenses can be overlooked easily; however, it is easily re-budgeted. If it is necessary, you can spend less money to buy cheaper items compared to the ones you are using in your daily life now.
Step number 4: Create an airbag. Here we are referring to a financial airbag. How do you follow it? You should determine how much you spend and how much profits you have on a monthly basis. Basically, that’s what you have already done in the previous step. The airbag is some money that you keep for the use when in risky situations. You can also choose a term of insurance for example. You can interpret it as your insurance for a bad day.
How do you count it? The optimal period for creating this airbag is 3 to 6 months total, which is rather important. If anything happens, you have 3 to 6 months secured. I should say that I would rather go for the 6-month option instead of 3-month option because you will feel safer that way. And this money should be kept somewhere else, where you cannot touch or have access to easily.
Sometimes people keep them in cash, sometimes if the currency in your country is not very stable and it’s devaluated and etc., sometimes people choose to go for a foreign currency, which is more stable, meaning the stability is a longer period of time than 1-2 years. Another option is to choose the saving account, or go for some investment which allows you to take money out at any moment you need to without any risks or losing any part of this fund.
Step number 5: Take control over your family’s budget, plan your expenses. It’s best to create a financial plan for let’s say from 6 to 12 months or even a little bit longer, so that you would know how much money you will need and which extra expense do you have. Also, very often people plan travel and stuff. Therefore, you should put all these options in this plan. It’s not a financial plan for your company.
It’s a financial plan for yourself and your family. You can plan your income, which is also a part of a financial plan. You can generate some extra income and plan on how to generate it. So, basically which part of your profits or income you will reinvest, or you will invest, then reinvest, then get some dividends. In general, financial education is far more important than what people give credits to. Even if you don’t plan on investing and just do your financial plan, you would know if you have enough money or not and, if there is anything that should be cut off.
Step number 6: Increase the number of your revenue sources. If you have only one source of income, it’s rather bad than good. Even if you feel very stable now, generating some extra sources of income is super important. It can be investment if you don’t have any, then again try to learn how to do that.
It can be some freelance work, site hustle, consultancy. You may not even realize how much needed your consultancy service is. It’s just if you have the contract that does not allow you to do the consultancy for the same type of work you do, then of course you can’t, but maybe some related industry. That’s usually very helpful.
Many companies hire independent consultants. Large business es during this time of recession are not really in good marketing condition, due to some of their large projects being postponed. But some small businesses that do not require lots of investment from your side is worth trying to provide them your consulting service.
Step number 7: Get rid of bad debts. Refinance loans is a part of it. So, basically whenever you are going for like you have to pay off something or you have huge loans and the conditions are not really good and you can get it refinanced from the other bank do it for sure. Because other banks still offer quite good refinance rates and if you have no option to go for the other bank to contact your bank, many banks offer postponed pay-offs and some other solutions that you may not think of. Just contact your bank to know what their offer is.
Step number 8: Save 10 % of your profits for future investments. Saving this amount every month will help you to create the mindset of investor, to create a culture of saving money. Not full amount but 10 % is somewhere, the minimum up to 20 % probably, not much more unless you really want to and you can do it freely, depends on your profits. If you have any financial trouble currently, you probably should stick with 10 %, no less than 10 % on a monthly basis.
Step number 9: Improve your skills and knowledge about finance. How you can do that? You can learn for free from YouTube videos. There are lots of information, you can do audio books, lots for free available. You can do reading, various books are there for you to digest, and they are not that expensive, or you can borrow them from someone. You can also do paid options like courses, coaching or whatever you think is right. It depends on your budget, what you have now.
I cannot stress enough on the importance of knowledge. Try to improve your knowledge while you have more time. When you are slightly free, spending some quite some time on improving your knowledge and skills will help you brighten your future, getting closer to financial freedom, etc.
Follow these 9 steps, and they will help you solve your financial problems tremendously.
Create by Olga Fleming