Tips on Personal Finance in 2020
Updated: May 13, 2020
2020 has definitely started with a bang, just not the kind most would have hoped for. Apart from the devastating health impact it has caused around the world, it has also brought a server economic downfall for many. Most businesses have had to shut their doors and therefore most of the employees have been furloughed. So much terminology that has been introduced into our daily vocabulary: furloughed, social distancing, isolation, flattening the curve...
These are scary times, and more than ever I believe that having a control over your personal finances could really help for multiple perspectives. The most important one would have to be security, because with so much uncertainty it is a MUST to you at least have clarity on your expenses. I'll therefore be sharing a number of tips I hope you will find useful. Lets get to it!
Tip Nº 1: Know where you stand
What is your starting point? There is a famous sentence that states: "If you don't know where you are or where you've come from, how can you know where you are going? Well, I believe this applies to all areas of our lives. Looking at this with a Finance lens, what it means is the importance of knowing how much you spend monthly and on what exactly. This is essentially downloading your bank statement or linking your bank account to an app. I will refer to the step by step techniques in another blog post so do stay tuned.
Tip Nº 2: Setting #Goals
This is all about planning. The question here is simple, where would you like to be in x amount of time. I love this part because it is essentially working backwards which makes things a lot more tangible. Lets take a look at the example of Lucy who lives with her parents. She can't wait to move out to rent an apart, however she cannot do so immediately as she needs to pay for a deposit. Well how much would she need to save monthly and for how long? If it is $1,000 and the maximum she can save is $50 per month, then it would take her 20 months.
Tip Nº 3: Reviewing Expenses
Once you've been able to analyse your spending, be it through your bank statement or via online apps. You will be able to understand exactly where your money is going. You can then divide it into 2 buckets: Fixed costs (you can't change in the short term such as rent, transport & bills) and Variable costs (drinks and dinner with friends, etc.). Variable costs are easier to reduce first, you might find you are still subscribed to something you no longer need. These days it's very easy to fall into those sort of traps and forget about it.
Tip Nº 4: Increasing Revenue Streams
Now it is important to consider this option because while it's all good and well to have a job, it is never guarantied. As many have unfortunately come to discover in these terrifying times we are living in (April 2020). Its been a long time now that we have had the internet available to us, and I have been observing all the stories of success that have come out of it. While I have spend many years educating myself and working in a corporate world, others have skipped all of these steps and are enjoying the benefits. So I have decided to try this route, and will be sharing my learning with you. Please do follow my journey and share yours with me, lets help each other grow.
Tip Nº 5: Tracking
Once you've decided on your main goal and objective, which is what you want to focus on first. You should start putting all your energy and work towards achieving your goal. When you start working towards your goal, you would need to constantly evaluate where you are on your journey and what are the next steps you need to make. The best way to do this is by planning. Given this is a Finance Blog, I will go into detail about the "numbers" side of planning. This is where we have the fantastic budget come into play. A budget is essentially a way to plan for your goals. Say I want to save $1,000 in 5 months, well what would I need to do every month? How about every week? We will go into more detail on this so do stay tuned.
Hope you have found the above tips useful, do let me know your thoughts and stay tuned as we dive deeper.
If you would like a fantastic Expense tracker to help you gain clarity on your numbers and spending habits, I am gifting it for FREE to the first 100 sign ups. Hurry up, don't miss out and enjoy :)