How to Manage Finances Effectively During a Pandemic
In this time of a pandemic, you must know how to manage your finances. In other words, you are also required to be good at practicing how to manage finances. The pandemic that has made things difficult in recent times requires us to be more effective in managing finances.
|Manage Finances Effectively During a Pandemic|
If you can't apply how to manage finances, this will potentially make it difficult for you to meet various needs.
Not only that, the prices of basic commodities and other necessities of life are also increasing every year. Meanwhile, the amount of our income tends to stagnate.
Therefore, it is very important for you to be able to apply how to manage finances as well as possible.
So, how to manage finances properly and correctly? Here are ways that you can do to manage your finances effectively.
How to Manage Finances: Understand the Difference Between Needs and Wants
The first way to manage finances is to understand what your needs and wants are. For those of you who are married or single, of course there are needs that must be met.
For example, the need for daily needs such as eating to the allocation of education if you already have children. However, in practice, how to manage finances is not only used for obligatory needs but also for spending based on desire alone.
Sometimes we even allocate more funds not on needs but desires. In fact, many of our desires are not really needed.
For example, buying the latest fashion, the latest gadgets, holidays, to other secondary and tertiary items that can cost a lot of money.
Even so, all of these things are not forbidden to be fulfilled. This means that you are only allowed to allocate funds for these things after the primary needs.
What are the primary needs? The first is clearly the need for daily living such as food, transportation, or house installments.
So, how to manage finances, the first thing you need to do is understand the difference between needs and wants. Fulfill your main needs first before allocating finances for other personal desires.
How to Manage Finances: Calculate All Income
For an effective way of managing finances, all you need to do is calculate the entire income that comes in for one month.
The income referred to here is not only from monthly salary income, but also includes the incentives you get when you receive overtime wages to profits when you invest, or take on freelance projects.
This is important to do so that you can divide the allocation of income that you have into the needs that you must meet.
Remember, the first thing that must be met is a primary need. By calculating all income, how to manage finances becomes easier.
How to Manage Finances: Create a Monthly Priority Expenditure List
The next way to manage finances is to make a list of priority expenses for a month. This list helps you in how to manage your finances effectively.
By making a priority list, the allocation and expenditure of funds becomes more organized.
Expenditures that are included in the priority list include the cost of daily meals, kitchen expenses, electricity bills, water bills, work transportation costs, children's education when they are of school age if you are married and own you, to vehicle or house installments.
In addition to helping with how to manage finances, this list will serve as a reminder that priority needs must be met first and then can be allocated to secondary and tertiary needs.
How to Manage Finances: Prepare an Emergency Fund
The next way to manage finances is to prepare an emergency fund. In life, not everything can go smoothly as planned. Many things suddenly happen outside of your plans.
Examples that often occur are disasters such as accidents, layoffs, to large-scale economic crises, or also difficult conditions due to a pandemic like now.
If one of these things happens, then your source of income can be disrupted and even worse. That's when the benefits of having an emergency fund budget can be felt.
For that, as a way of managing finances, it is important for you to prepare an emergency fund. The trick, in addition to basic needs, set aside a portion of your income each month for an emergency fund.
The relative amount can be 10-30 percent of the income you get each month. Remember, the money you set aside every month is for an emergency fund that is only used occasionally or in an emergency.
How to Manage Finances: Avoid Purchases with Installment System
The next way to manage finances is to postpone the desire to buy things that are not needed. Also postpone the desire to have a new cellphone or other items that are not considered too important, even though there are payment options with an installment system.
In times of pandemic conditions like today, saving money and saving every money is far more important than buying something tertiary is the right step in managing finances.
Even if you already have savings or an emergency fund to buy this, it's better if you postpone the desire until the critical period is over.
You can also do this way of managing finances by keeping or saving credit cards or anything that can trigger the desire to shop.
How to Manage Finances: Allocate to Savings, Insurance and Investments
In addition to allocating income for a reserve or emergency fund, you also need to allocate income for purposes other than routine needs. These include spending on savings, insurance, and investment. All three are included in how to manage finances well.
All three have many benefits. Insurance is useful to protect yourself from health costs. While investments can be used as long-term savings so that the money you have doesn't just run out.
For savings, as we know, is clearly useful for current and future needs. The income you save in savings can be used for daily expenses or sudden needs.
When deciding to save, you should know the best place to put the money you have, namely the bank. Saving in a bank in addition to having several advantages also ensures the security of the money you have. In addition, by saving in the bank, your financial expenses can be more easily monitored and controlled.