5 Steps To Gain Financial Freedom During Pandemic
The pandemic has led us to see things differently. It has changed our perception of things that were once of no importance and has helped us become more compassionate human beings. However, it has made us more concerned about our finances. The pandemic did make us realize that financial freedom is extremely important, especially during a crisis of this size. Our article is focused on helping you become financially independent and dealing with your finances in a better way.
You can become financially independent today by following the steps below!
1. Have An Emergency Fund
With rampant unemployment, there are hundreds of households left without a penny in their bank accounts. There is no denying the fact that each one of us should have had some sort of emergency fund to meet unforeseen circumstances. The scenario created by COVID-19 has only made us see this bitter reality up close.
It is strongly advised to have at least 3-6 months of money worth of expenses in your bank account at any given time. It is important to keep this amount only under a special emergency fund, which you cannot use under normal circumstances. Extra money in your bank account can give you flexibility and freedom in the face of a crisis.
The crisis may not necessarily be in the shape of a global pandemic. It can be an expected hospital expense or a car repair bill or even a lost job. There are plenty of ways through which you can automate your savings. You can set a particular amount aside every month and set monthly goals for yourself. As you get into the momentum to save, you will soon start to enjoy it and understand the value of money more.
2. Stick To A Budget
Most people are scared of sticking to a budget as they think it would restrict them from having fun in their lives. Well, the truth has a budget that will allow you to do everything that you already do. The only difference is that you will have more calculated spending. You will be more aware of where your money is going and have control over your finances.
Think of your budget as a road map to help you deal with your finances. By having a budget, you will have more clarity, and hence you will be calmer when faced with uncertainty. Every penny you spend will be accounted for, and you will find it easier to help you save money. This will ultimately help you control your financial life more than it has been controlling you!
3. Be Debt Free
Taking loans can be extremely important for a full-fledge life and can help make life a lot easier. But the harsh reality remains, loans need to be paid back! Therefore, one should only acquire a loan for themselves when they are exactly sure of how they will be paying it off. If you are still learning how to take care of your finances, you must know how good debt and bad debt are different from each other.
Good debt is the money you are borrowing to increase the value of your pre-existing money. Examples of good debt can be money for a new home, a business, or a student loan. Whereas, bad debt is money that you are taking from yourself today to be paid later by you. Examples of this kind of debt are high-interest credit card purchases or payday loans.
Being trapped within a vicious credit card cycle is probably the worst thing you can do to yourself in your adult life. Try not using your credit card to make purchases that you can’t afford. If you are already trapped in this cycle, then it is high time to make some changes in your life. Remember that it is more important to be debt-free that it is to have a wealthy lifestyle.
4. Invest Smartly
If you are struggling to maintain your savings account, then you must invest in your savings in order to secure your future. The right investment plan can help you safeguard your future and plan your retirement as well. If your employer offers a retirement plan, make sure you are contributing enough to be able to get the full benefits. If you have already done this, you may invest in a brokerage account, which will help you invest in either bonds, stocks, etc.
The pandemic has made it difficult to predict when the stock market will climb up again, but for a long-term venture, you can plan out your investments so that you invest wisely in the stock market. If not the stock market, you can invest in an industry that is doing comparatively better during this crisis, such as the digital marketing sector.
5. Hire A Financial Advisor
It is completely normal to be overwhelmed by finances, and at a point, you may need to contact an expert to help you make better choices related to your finances. A financial advisor may be able to review your current financial situation in a better way and understand the elements that you were not able to analyze. Moreover, if you are thinking of converting your liquid investment into tangible wealth, then you could use the assistance of an advisor to educate you on the market scenario and help you make more well-informed decisions.
Take-Home Message
Financial freedom is not just a few extra dollars in your bank account; it is a state of calmness and mental peace. The steps that we have discussed above might not be able to take away all your financial woes, but they will help you analyze your current financial situation and develop healthy spending habits. By following simple steps, you will be able to create a more secure future for yourself and your children, a future that is sustainable even in the face of a crisis like a pandemic.