11.06.2021
HOW TO ORGANIZE YOUR FINANCES DURING A CRISIS
Taking care of personal finances is fundamental if we want to lead a happy and balanced life. This means that this care must start from the moment we start handling personal funds, earning money and distributing it according to our desires and needs. In this way we learn to manage our finances in unpredictable circumstances.
Let's look at the possible options for action in cases where we find ourselves in a situation of economic crisis - a personal financial crisis or a crisis in the environment around us. We will go through the steps we can follow to successfully organize our budget.
Surely most of the following things have happened to most of us:
- We try to save on our monthly income, but we fail because something always "emerges" and we postpone for the next month.
- We live from salary to salary.
- We feel a "shortage" of money, but when we increase our monthly income, for example through better paid work, we continue to have the same feeling and our financial situation does not change much.
In order to overcome these and other similar obstacles to the "recovery" of our finances, we must first be aware of what money means to us.
It is important to try to analyze how we perceive money and what role it plays in our lives. This is extremely important, because if we do not know our own attitude, there is no way to change and improve it. Here are some guiding questions we can get to know ourselves:
- What was the attitude to money in my family ?;
- What is my attitude to money today?
Before answering the questions, we need to think very carefully about whether we perceive money as a source of anxiety or an end in itself, and how often we think about it. Some people only think they have a financial problem when they are at a dead end. By answering these questions honestly, we are taking the first step toward enriching our financial culture and learning about our attitudes toward money.
Once we understand what money is for us, we can proceed to build a personal budget. It is a concept that, in addition to tracking income and expenses, includes the already mentioned attitude towards finance and gives us a broader perspective.
For starters, we can start with a simple tracking of income and expenses. The main goal, of course, is not to spend more than we earn. Various types of applications are now available that facilitate the process of tracking spending. Using a very simple table can also bring good results. The important thing is to be consistent in keeping records and to build habits that work for us.
Another tool that helps in the organization of our finances is setting a financial goal. It can be short-term - for the next few months or a year, or it can be long-term - for the next five, ten or more years. It is important that the goal is as specific as possible, achievable for us and that it is bound by a deadline.
Examples of financial goals are debt repayment (consumer loan, mortgage, etc.), saving for the purchase of an object (car, telephone, etc.), saving for education or retirement, building the habit of saving, creating an investment portfolio, etc.
Setting a financial goal helps engagement and motivation. In addition, it further encourages us to consider the way we spend. In times of crisis, it is extremely important to manage our funds without succumbing to impulsive decisions such as unnecessary quick purchases. Although they bring short-term satisfaction, they have a negative long-term impact on our financial routine.
The next step, which is essential for the successful management of our finances, is to achieve a good level of financial literacy. This includes basic knowledge of macroeconomics, knowledge of processes such as inflation, basic market functions and trends, investment opportunities. The Finance Academy accepts financial education as a mission through which to achieve sustainable improvement of the quality of life in our country. The goal is to achieve better financial solutions and build appropriate habits. Thus, the effect of a crisis on our daily lives could be minimized without turning our world upside down and making us make big and uncomfortable changes.
In the Investment and Personal Finance Program at Finance Academy you will find successful strategies for managing your personal finances, how to successfully save and invest.
