Advertising
Advertising

5 Tips to Overcome a Financial Crisis

5 Tips to Overcome a Financial Crisis

The fear of being hit with a miserable incident that could change your financial condition, like losing your job, impoverishment, or a sudden medical emergency, can be a nightmare for anyone. Such miserable events require you to make major changes in your life and the revitalization period is incredibly stressful. Often, it is the result of a lot of trifling constant worries building up to one huge breaking point, and then all of a sudden everything rushes through, constructing a tidal wave of anxiety and fear and stress.

However, your financial crisis can be remedied by regaining your self-control and taking solid actions. The financial benefits of dealing with financial crisis—saving more, paying down debt—will improve not just your self confidence, but your overall mood as well. The less you worry about dealing with finances issues, the more you can enjoy life. You may consider your circumstances as unique, but many people around the world have walked this path before you. The road to financial revival is shabby but the steps to return after the financial disaster are well-proven.

So let’s get started with some useful tips that will help you to get motivated to take control of your finances:

Advertising

1.  Identify the Problems

The first step to overcoming financial crisis is to identify the primary problem that is causing difficulties. Financial problems are generally an indication of a larger issue and to come up with long run solutions, you have to identify the actual cause of your financial troubles. The idea behind the importance of uncovering a specific problem is to come up with a permanent solution. Just like a leaky tap in your house; placing a bucket below it is a temporary solution. Fix the tap and the leak will stop permanently. Rather than dwelling on your stress, focus on resolving the problem that’s causing your financial problems.

2. Create a Budget

One of the best ways to deal with financial problems is creating a budget plan. A budget is a weekly, monthly or a yearly spending plan for your money that guides your spending decisions on important stuff for you. As you create your budget, it’s important to track your expenses for at least a couple of weeks (a month is best) to objectively see where and how much you are spending.

Once you are able to get realistic numbers from your budget, you can review your budget critically and seek out areas where you can save. Things like spending less on eating outside, spending less on entertainment or hobbies, taking lunch from home to work rather buying it are things that don’t make you miserly or restrict your budget. They just allow you to go after bigger things with less stress, like paying off your mortgage.

Advertising

3. Set Financial Priorities

Determining your financial priorities is essential to overcome any financial crisis. These priorities help you to make tough financial decisions such as paying off your credit card bill, paying your mortgage or saving up for house repairs for your family; setting priorities will help you solve your money troubles and get back on track. Your financial priorities should include looking into new ways to have money coming in too, like a second job, downsizing your home, or even using assets you have like a mortgage to leverage financial flexibility for yourself.

4. Address the Problem

For most people, financial problems can be addressed by reducing expenses and increasing income, or a little combination of both, but it might be not be the ideal option for everyone. For humans, changing lifestyle is the most difficult task, but given the money crisis situation, we are forced to make changes.

So to deal with it, take small steps to accomplish your goals because big changes are always much harder. For instance; if you’re running $50 short every month, then perhaps you should first pay off a small credit card debt that requires a $50 minimum payment each month. By taking small steps get the card paid off, and then permanently have $50 extra to use in your budget every month or use it for the payment of another debt, and get all of your debts paid off more quickly.

Advertising

This methodology is called the “snowball effect”; putting all extra money towards one debt to pay it off faster and then use the extra amount towards eliminating the next debt. It is very useful method for paying debts off faster.

5. Develop a Plan and Track Progress

Once you have ideas to tackle your financial difficulties, come up with a realistic plan to accomplish your financial goals with a timeline of weeks, months or years and track your progress continuously. For example, if your goal is to pay off a $2,000 debt, make a plan and create a timeline with the amount of money you will pay every month so that you can pay it off within your desired time frame. Once you are on the road to achieve it, take a few minutes to review the progress. Evaluate and assess your plan, see if you are making progress toward your goals and be open to the possibility of fine-tuning the plan.

Unforeseen financial challenges are like uninvited guests and can strike at the most unfortunate times. For example, recent findings show that 6 in 10 Canadians will face some major life events that will change their prior financial plans. The key to overcome these financial challenges is to be flexible. Make and review your budget and make necessary changes.

Advertising

Featured photo credit: Mitya Ku via flickr.com

More by this author

10 Traits of Sucessful Heroic Leaders 25 Signs That You’re A Mentally Strong Person 10 Astonishing Benefits of Marmite That Will Turn Your Hatred Into Love 5 Fun Ways to Make Money Online That You Should Try 4 Crucial Startup Mistakes That Can Kill Your Business: How You Can Avoid

Trending in Money

1 How Personal Finance Software Helps You Get More Out of Your Money 2 The Best Ways to Save Money Even Impulsive Spenders Can Get Behind 3 How to Answer the Tough Question: What are Your Salary Requirements? 4 The Definitive Guide to Get Out of Debt Fast (And Forever) 5 35 Real Ways to Actually Make Money Online

Read Next

Advertising
Advertising
Advertising

Last Updated on January 2, 2019

How Personal Finance Software Helps You Get More Out of Your Money

How Personal Finance Software Helps You Get More Out of Your Money

Do you know what mental health experts point to as the biggest cause of stress in the United States today? If you said “money,” then ding, ding, we have a winner!

Three out of four adults today report feeling stressed out about money at least part of the time. People are either worried about not having enough money or whether they’re putting the money they do have to use in the best possible way.

Your money is either in charge of you or you’re in charge of it, there’s no middle ground. Using some type of personal finance software can help alleviate some of that money stress and better allow you to manage your money effectively. Without it, you may just be setting yourself up for constant financial worry. Life is already tough enough and there’s no need to make it more difficult by simply hoping your money issues will all work out in your favor. Hint: they won’t.

This guide will help you to understand how personal finance software can better assist with both accomplishing long term financial goals and managing day-to-day aspects of life.

Whether it’s tracking the savings plan for your child’s college fund or making sure you won’t be in the red with the month’s grocery budget, personal finance software keeps all this information in one convenient place.

What Exactly is Personal Finance Software?

Think of it like the dashboard in your car. You have a speedometer to tell you how fast you’re going, an odometer to tell you how far you’ve traveled, and then other gauges to tell you things like how much gas is in the tank and your engine temperature. Personal finance software is essentially the same thing for your money.

When you install this software on your computer, tablet, or smartphone, it helps to track your money — how much is going in, how much is going out, and its growth. Most personal finance software programs will display your budget, spending, investments, bills, savings accounts, and even retirement plans, levels of debt, and credit score.

Advertising

How It Leads to Financial Improvement

It shouldn’t come as a surprise, but people who regularly monitor their finances end up wealthier than those who don’t. When you were a kid, keeping track of all of your money in a porcelain piggy bank was pretty easy. As we get older, though, our money becomes spread out across things like car payments, mortgages, retirement funds, taxes, and other investments and debts. All of these things make keeping track of our money a lot more complicated.

Some types of personal finance software can help make things a little less complicated, setting you up to meet financial goals and taking away some of the stress associated with money.

Even if you already have a Certified Financial Planner (CFP) some type of personal finance software can be of great benefit. Whereas CFPs focus on the big picture of your money, they don’t handle the day-to-day aspects that determine your overall financial health.

It’s also not nearly as complicated as you might think and can take out a lot of the tedium that comes with doing everything on an Excel spreadsheet or with a pad and pencil.

Types of Personal Finance Software

When it comes to personal finance software, it generally fits into two categories: tax preparation and money management.

Tax preparation software such as Turbo Tax and H&R Block’s software can help with everything from filing income taxes to IRS rules and regulations and even estate plans. Plus, there’s the benefit of filing online and getting your refund check a lot faster than if you were to mail off your forms after waiting in line at the post office.

For the purpose of this article, however, will be focusing more on the personal finance software that aids with money management.

Advertising

Money management personal finance software will help you to see the health of your cash flow, pay down debt, forecast for expenses and savings, track investments, pay bills, and do a host of other things that 30 years ago would have practically required a team of accountants.

When to Use Personal Finance Software

So far we’ve gone over what exactly personal finance software is and how it can be a benefit to your money. The next logical step in this whole equation is determining when it should be used and how is the best way to go about getting started using it.

Below are four of the most common and practical ways to use personal finance software. If all or any of these apply to you and your money, then downloading some type of personal finance software is going to be a smart move.

1. You Have Multiple Accounts

There’s a good chance that when it comes to your money, it’s in more than one place. Sure, you probably have a checking account, but you may also have a savings account, money market account, and retirement accounts such as an IRA or 401k.

If you’re like the average American, you probably have two to three credit cards as well. Fifty percent of Americans also don’t have loyalty to just one bank and spread their money across multiple banks.

Rather than spending hours typing in every detail of every account you have into a spreadsheet, many programs allow you to easily import your account information. This will help to eliminate any mistakes and give you a bird’s eye view of everything at once.

2. You Want to Automate Some or All of Your Payments

Please don’t say that you’re still writing out paper checks and dropping each bill in the mailbox. While it’s noble that you’re doing your part to keep postal workers employed, we’re 18 years into the 21st century and you can literally pay every bill online now.

Advertising

There’s no need to log into every account you have and type in your routing number either.

With personal finance software you can schedule automatic payments and transfers between all of your imported accounts. Automatic transfers will help to make sure you have the necessary funds in the right account to ensure all bills are paid on the appropriate date. Late fees are annoying and do nothing but cost you money. It’s time that you said goodbye to them once and for all.

3. You Need to Streamline Your Budget

Perhaps the best feature of personal finance software is that it allows you track everything going in and out of your virtual wallet.

Nearly every brand of personal finance software out there has easy-to-read graphs and charts that allow you track every cent you spend or earn, should you choose. You might be pretty amazed when you see just how much you spent on eating out last month or if you splurged a little more than you should have on Christmas gifts last year.

Every successful business on the planet has a budget and using personal finance software can help you trim the fat on your spending in ways that affect your everyday life.

4. You Have Specific Goals to Meet

Maybe it’s paying off debt or saving for up something like a European vacation. Whatever your financial goal is, whether it’s long-term or short-term, personal finance software programs are one of the savviest ways to go about reaching those goals.

You can do everything from set spending alerts to notify you when you’re over budget to automating what percentage of your paycheck goes to things like retirement investments. The personal finance software that you choose should show you exactly how close you are to hitting those goals at any given time.

Advertising

How to Get Started

From AceMoney to Mint and Quicken, there ’s no shortage of personal finance software apps out there. Many of these programs are free to download and will allow you to pay bills, invest, monitor your net worth and credit profile, and even get a loan with the swipe of a finger.

Other programs may only offer you limited services and will require a one-time fee or subscription to unlock all that they offer. These fees can often vary from as little as two dollars to 50 bucks a month.

It’s best to start off with the free version and then gauge whether you’re able to accomplish everything you’d like or if it’s worth exploring one of the paid options. Often times the subscription programs come with assistance from financial planning and investment experts — so that can be a real benefit.

When deciding which personal finance software program to use, it’s also important to look at how many accounts you wish to monitor. Certain programs limit the number of accounts you can add. Be sure that if you have checking, credit card, and investment accounts to monitor, that you choose a service that can monitor them all.

Finally, when looking around for the right personal finance software that meets your needs, make sure that you’re comfortable with the program’s interface. It shouldn’t be expected that you recognize every single feature instantly, but if the features don’t seem readable and manageable to you, then you’re not as likely to use it and get the full benefits.

Final Thoughts

Personal finance software can go a long way in helping you to take control of your money and meeting your financial goals. It’s important to note, however, that some focus more on budgeting and expense tracking while others prioritize investing portfolios and income taxes. Explore several different programs and read reviews to find the one that’s right for you.

In this day and age, managing one’s personal finances in a secure manner that allows the user to have a real-time visual representation of their money is easier than ever before. With the numerous applications that are out there — both free and subscription-based — there’s no reason that every person can’t take control of their money and ensure they’re making smart money moves.

Featured photo credit: rawpixel via unsplash.com

Read Next