I was catching up with my brother a couple of weeks ago and he mentioned that he’s been having having some financial issues. He’s been living on a tight budget. He’s going to school and he has a part time job building computer systems so his time is limited. As an older sister my first instinct is to offer advice; but I know that since he’s older now he knows what’s best for him. I can give tips, but he’ll know what will work for his circumstances.
Global Economic Crisis
I know he’s not the only one dealing with the economic crunch, so I decided to share of the advice and tips I shared with my brother. Hopefully you can see what will work best for you and your situation.
Understand Your Finances
Having a clear picture on where your money is coming from and where it’s going is essential.
- How much am I (or are we) in debt?
- How much income do I/we take home each month?
- How much are the monthly expenses?
- How much do I (or we) have in savings?
- Am I behind or delinquent on any bills?
- How much is in my retirement account?
- What’s my (or our) net worth?
You have to be able to answer these questions with specific numbers, not estimates so you can create a plan that will work for your situation. If you’re looking for more tips I have a post on getting a handle on your finances in this economy that can help.
Protecting Yourself: Financial Risk Management
Many times I’ve mention finding ways to cut back on expenses. That’s an important truth, but for some people they can’t do that. Their budget is already bare bones and they need help paying the bills. The new reality is that many college students and graduates are a paycheck or two from financial ruin.
The solution is building up several income streams. It can be a side job or it can be many smaller projects and gigs that add up.
Look at your circumstances and see how you can add even just a little bit to your income. Here are some ideas to get you started:
- Babysit, pet sit, or housekeep
- Start a business
- Sell used items at a yard sale, on Ebay, or Craigslist
- Do some freelance work on the side
Each of these can give you a boost of income that you can use to make ends meet or stash away for an emergency.
If you’re in a relationship, work at keeping the lines of communication open. It’ll help you weather the storm and avoid money ruining the relationship.
You have an advantage with two people as both of you can find ways to nudge up your income.
If you have to adjust your spending and savings habits go over the plan together so you’re on the same page. Encourage one another to keep at it until you reach your goals. Instead of letting the crisis harm the relationship, use it as an opportunity to work together.
Psychology of Money
Looking at passive and active barriers and how to tackle them can help you increase your net worth? Curious to see what affects your money making (or losing) decisions? Check other posts in the Money & Psychology series:
- Choosing Friends to Build Your Net Worth
- Decisions, Decisions – Making a Big Purchase
- Is Saving Really About Motivation?
- Ways We Spend Money Without Evening Knowing It (and How to Fix It)
- Barriers That Prevent us From Saving Money
How are you working through this economic mess? What tips can you share?