It's no secret that we're living in a tough economy. With businesses
failing and jobs being lost due to COVID-19, it's important now more than
ever to implement smart spending strategies in your day-to-day life.
Applying these small changes will not only save you money, but will also
instill long-term financial habits that'll have you more than prepared for
the next pandemic, emergency or natural disaster.
- Create (or revisit) your monthly budget -
Establishing a monthly budget is an easy way to ensure that you're
not overspending or living above your means. Additionally, mapping
out all of your expenditures will help you determine which items or
services are a necessity, recognize areas you can cut back on, and
ultimately allocate more of your income toward savings, paying down
debt, or building up your emergency fund.
- Track your spending - In addition to creating a
monthly budget, tracking your day-to-day spending is a great way to
monitor where your money is actually going, so that you can easily
recognize and downsize on expenses that are considered
discretionary. Becoming more aware of your spending patterns will
make it much easier to eliminate those nonessential expenditures
like dining out or online shopping.
- Diversify your income - With Americans'
confidence in their job security at an all-time low, it's never a
bad idea to have multiple streams of income to fall back on in case
of an emergency. However, this doesn't necessarily mean you have to
take up a second job. A few creative ways to bring in a little extra
income could include monetizing your skills or hobbies, investing in
the stock market¹ or real estate, using a high-interest savings
account, or simply negotiating down your monthly expenses (like your
phone or internet bill).
- Pay down debt - Accumulating debt in the midst
of a recession will only add to your financial burden. Once you've
determined a monthly budget and tracked your reduced expenses, it's
important to put those additional savings toward paying down any
outstanding debt. Eliminating those high-interest obligations will
not only create breathing room in your budget, but also put you in a
position to be better prepared for whatever unexpected event life
may throw at you next.
- Build up your emergency fund - On top of paying
down debt, setting up an emergency fund is crucial when it comes to
preparing for (or living through) a recession. If possible, save up to
3-6 months' worth of household expenses that can act as a safety net in
case of a crisis. Not only will this keep you afloat until you're ready
to get back on your feet, it will also prevent you from accumulating
more debt - therefore lessening the weight of financial burden in the long run.
- Focus on the big picture - The future is still uncertain.
Don't put all of your focus on the short-term economic downturn and act
irrationally when it comes to your finances (like pulling out of the stock
market or building up credit card debt). Instead, keep in mind that recessions
eventually pass, and develop a financial plan that incorporates smart spending
and saving strategies that will set you up for long-term success.
Most importantly, remember to stay calm. We're in this together, and
there are resources available to those who are struggling. North Dallas
Bank & Trust Co.'s dedicated wealth management professionals are here to
help you develop an actionable plan that will lead you to a more secure
financial future in a post-pandemic world. Call 972-716-7100 to consult
one of our experts today, or visit
¹Some investments and products: Are NOT Deposits, Are
NOT Bank Guaranteed, Are NOT FDIC Insured, Are
NOT insured by any Federal Government Agency, May