Some of you may be experiencing financial difficulty during this pandemic. Here are great ways to overcome them…

Overcoming Financial Difficulty During the Pandemic

As we near the end of 2020, many of us are likely taking a deep sigh of relief at the fact that we made it through the year. Without a doubt, this year has been like no other and for many of us, we were faced with challenges we had never imagined. With the pandemic-induced shutdowns across the country, many Americans lost jobs and businesses which in turn, created a huge strain on our finances. Not to mention the upcoming holiday season that historically accounts for the majority of our yearly spending.

Although we may have become adjusted to the lifestyle that COVID-19 brought about, you most likely weren’t prepared to battle finances throughout the year and especially now as the holiday season approaches. Luckily, there are still some steps you can take with the time left in 2020 to overcome any financial difficulty.

Give Yourself a Break

Before you begin to stress yourself about your financial state, the first thing you should do is breathe. Understand that the simple achievement of surviving this year is something to be proud of. Try not to place unhealthy expectations on any aspect of your life and truly give yourself a break. If need be, explore some ways to relax before you dive into any money issues.

For example, take advantage of some of your favorite activities or try to revamp your self-care routine. While it may take a little creative thinking, both of these can be done without any extra spending on your part.

Instead of investing hundreds of dollars into a spa vacation or overwhelming yourself with a slew of new face masks and serums, you can actually replicate your own spa getaway at home with a few of your pre-existing supplies and decor pieces. In any case, the first thing you should do before tackling the stress of finances is complete a mental wellness check to ensure that you are alright before continuing.

Review Your Finances

An essential step in overcoming financial strain is to review any financial decisions you have made this year.

This can include overspending, financial missteps, or even smart investments that you’d like to build upon in the future. Not only will this review process allow you to see the ways you struggled this year, but it will also help you to develop an effective financing strategy moving forward.

First, you should start by determining your net worth — or in other words, the value of your assets minus your liabilities owed. Your assets typically include any expendable cash you have or property investments like a home, car, or boat. Liabilities, on the other hand, include any outstanding debt owed, like a mortgage, student loans, or credit card debt.

Avoiding Bankruptcy

Once liabilities are subtracted from your assets, the goal is to have positive net worth as this indicates that you still have more money than the amount you owe and you won’t have to explore options like bankruptcy.

Next, you should consider your debt-to-income ratio which means exactly what you would think. Essentially, you would begin by compiling a list of all of your debt payments over a period of time and comparing that to your income made over that same period.

Again, you want to aim for a positive ratio as this will indicate how much money you’re actually making over a specific time period. However, if this number is negative, you are losing money consistently which could drive you toward greater financial difficulty in the future.

Some other points to consider include:

• Income
• Spending habits
• How often you take on new debt
• How frequently you pay off debt

Exploring each of these areas of your finances will help you determine how your lifestyle or the pandemic has impacted you and how to make changes moving forward.

Adopt a Plan

Depending on the lifestyle you live as a middle-aged man or woman, you’ll also want to adopt a spending and budgeting plan for the future. Whether or not you’re single or married, or working or retired, there are some general planning tips you can adopt to ensure that they will benefit you down the line.

When creating a budgeting plan, you should start by considering your expenses. While basic budgeting strategies may have typical expenses like rent or mortgage payments, you’ll also want to add any middle-aged-specific expenses that may not be assumed.

For Example

For example, for us, many retirement investments, healthcare, and insurance are all necessities and shouldn’t be sacrificed even amidst financial strain. Instead, cut out as many elements that don’t contribute to your overall health, safety, or protection.

As the holidays approach, account for any holiday spending as early as possible so that you can cut back on spending in other months of the year. Save up where you can try out some quick holiday saving tips. Ideally, you won’t have to sacrifice your gifts even while you are rebuilding your finances.

Debt-Free Financial Plan

Aside from your basic budget, you should also adopt an overarching debt-free financial plan. During COVID-19, many of us had to take on some form of financial assistance to stay afloat this year; however, in your 50s, debt freedom becomes even more important to adopt as it ensures comfortability after retirement. So, this is the time to truly dedicate yourself to a debt-free plan.

A 10-year-plan should suffice; however, you can adjust to whatever you feel is most feasible for you. Some common tactics when taking on this feat include refinancing your home to a lower interest rate or upping your payments for a faster payoff. Additionally, this debt-free plan should include any student loan payments for yourself or your family.

Think Smarter

Arguably one of the most important parts of overcoming financial hardship this year is to think smarter, not harder.

With the entire world still adjusting to the effects of the pandemic, there’s not necessarily a clear strategy that everyone uses to overcome the trouble. So, the key is to build your own strategies with a combination of smart tactics that will help you to save, build your finances, and reach financial freedom in the future.

One of the biggest expenses you own is likely your home and luckily, there are a number of ways you can save on it now to benefit you in the future. For example, in your 50s, you may not be interested in fixing and repairing every damaged and faulty system in our home. And, unbeknownst to many, it’s not always financially wise to do so. In some cases, suitable home warranty plans would bring more peace-of-mind and savings over time than if you were to take on any home repair yourself. This ‘invest now to save in the future’ mindset can be useful for a number of your other assets as well.

Lifestyle Adjustments

Additionally, when it comes to regular spending, many of us may find it difficult to cut back on a lifestyle we have become accustomed to; especially during the holiday season. However, there are ways you can adjust the manner in which you buy to allow you to spend considerably less over time. For example, off-season purchasing can be helpful for everything from clothing to home buying.

For every industry, there is a period of time when the products and services are in high demand and you should aim to shop outside of that, as many companies drop their prices to account for the lesser demand.

Additionally, take advantage of the changing market that COVID-19 has brought on and scope out areas where there is less demand like retail, the real estate market, travel, etc. Throughout the pandemic, many have found remarkable savings by trying new tactics such as these.

Feel Accomplished

If you’ve made it through 2020 alive and well, you should feel accomplished.

Unfortunately, financial trouble was just a byproduct of the pandemic for many of us and we are struggling to pick up the pieces. However, simple strategies may be the way to go to truly conquer and build up our finances in the future. Taking a break, reviewing your finances, adopting a plan, and discovering smart spending tactics will not require too much of your time and effort. However, they can be the start to complete financial freedom — even after the pandemic. Try these tips and don’t forget to look to a financial advisor or mentor for added assistance, and watch as your financial state changes for the better.

I hope this helped you think of your financial future. If you have any questions, please post them in the comments at the bottom of this page.