Many individuals and families are feeling the crunch in today’s economic climate. Here are some tips and resources to help guide you through these uncertain times.
Things That Are Always a Good Idea, Especially Now
- Track Your Expenses for 3 Months. Pay attention to where your money is going and eliminate unnecessary spending.
- List your “Have-to-pay” expenses: Be very honest with yourself. A gym membership or Hulu subscription isn’t a have-to-pay for most people. This is for things like rent, mortgage, insurance, basic grocery expenses, car payments. It’s important to know the total you HAVE to be able to pay every month.
- List the “Nice-to-haves”: Next, write down the monthly expenses that might be no fun to cut out, but aren’t essential and didn’t make it into the “have-to-pay” group. Then rank the list from easiest to hardest to give up. This will help you quickly cut expenses if times get tough. You already know what to do so you won’t have to make hard decisions in an already stressful time.
- Fraud: Make sure that you recognize all your payments. Sometimes criminals make the transactions small so you won’t catch them.
- Recurring payments: Sometimes people have more than one account and have no idea, or have subscriptions they’ve forgotten about and never use. These are the rare things you can cut and not miss anything at all. Our CEO had two Netflix accounts and didn’t know until he did this.
- Interest on Debt: It’s best to pay off all your credit cards every month. But if you’re low on cash, you should prioritize. Start by making a list of all your debts, including the interest rate, minimum payments, and outstanding balance for each. Make the minimum payment for all of them every month and put any extra towards the debt with the highest interest rate until it’s paid off. This will save you money in the long run.
- Emergency Fund: Having at least one month of expenses saved in a checking or savings account is important if you can do it. If not, make a plan to work in that direction.
- Major Purchases: Plan and save in advance for large purchases (cars, houses, vacations, etc) and don’t take on more debt than you can comfortably afford.
- Watch Out for Scams. Criminals step up their game – when people are most vulnerable. Don’t open unknown emails or click on unexpected links. Don’t answer calls from unknown callers. Donate only to known charities. Verify all requests for information independently (not through the link or phone number provided).
- Durable Power of Attorney: Now is a good time to set up a durable financial and durable health care power of attorney. Each of these will allow someone you trust to take care of your financial affairs / medical decisions if you can’t. Setting one up even if you’re in good health is a good idea in case of an accident or other sudden illness.