Guest Author: Brittany Fischer
We’ve all felt the immediate consequences of the pandemic, from getting the hang of social distancing to changing how we shop and work. Along with those consequences, there’s a bigger, scarier consequence too, which is the economic uncertainty we’re all living in. However, the journey to financial freedom isn’t something that happens overnight. That’s why we want to give you specific strategies that will help pull you through this time of economic uncertainty.
Add an Income Stream
Regardless of whether you still have a job or you’re out of work entirely, anyone who wants financial freedom needs multiple streams of income. The best long-term strategy is to create passive income that pays you for years to come, but at times when money is tight, your first priority is to start bringing in money ASAP.
Work-from-home opportunities are out there, but you may have the most success finding them if you work as a freelancer. One reason freelancing is such a good approach is because more companies are embracing the gig economy, plus freelancing is a natural fit for working remotely.
To find a good freelance opportunity, think about your skills and experience, and then search for jobs where those skills are in demand. For example, someone who has experience with writing should search online job boards for companies that are in need of a freelance content writer. Be sure to keep an open mind because you may be surprised by the broad range of freelance jobs available. The Simple Dollar gives us a few examples of this, with doodle video creation, scriptwriting, and translation listed among the top lucrative freelancing jobs that are rising in popularity.
It’s important to keep in mind that working as a freelancer changes your tax situation; there’s no buffer of having your employee taxes covered. Therefore, it’s wise to set aside 25-30% of your earnings from each check. And when tax time rolls around, save yourself the headache of a DIY tax preparation, and turn to experts to ensure that you’re on the right track for filing.
Adjust Your Budget
If you don’t have a family budget, don’t wait another minute to set one! The very basic rule of budgeting is that you need to spend less than you make, and whatever is leftover goes into saving and investing, or towards paying off debt.
That’s a good rule of thumb in general, but when money is tight, you may need to adjust some categories in your budget in order to achieve this goal. This means spending less (which we’ll talk about in a minute), and if at all possible, saving and investing more.
Everyone should have an emergency fund as part of their budget, and this is a good place to put some of that extra money you aren’t spending in other categories. This strategy is especially smart if you know your job or another source of income is at risk because it means you’ll be better prepared if and when that rainy day comes.
Last but not least, you need to take a good look at your budget. If you don’t have your debt under control, you’ll have a very difficult time putting together a budget that works well for you. If you need, contact a debt counselor to discuss your problems and solutions you can use to help get it reined in.
Save on Necessities
Necessities are by definition the things you have to buy, but there are countless ways you can make them take up a smaller portion of your budget. Start with the biggest expenses like housing. For homeowners, this may be a good time to refinance your mortgage. For those who rent, The Skimm recommends negotiating for lower rent, or if that isn’t an option, consider downsizing or co-housing. While you’re in the process of negotiating, take a look at other bills that you could negotiate, like your phone plan, medical bills, and credit card interest rates.
You should also look for ways to save on equipment like office supplies and laptops, the latter of which is very important. If you don’t have a computer that can effectively run the programs you need to do your job, then your business will suffer as a result. Take some time to find savings on laptops (Chromebooks and ThinkPads are good options for business owners on a budget), and make sure you have a reliable backup system in place to keep your data secure in the event of a virus, hacker, or hard drive malfunction.=
Don’t get so caught up in the big expenses that you overlook smaller ones, though. When you aren’t careful, the amount you spend on food and drinks can get out of control, but The Penny Hoarder explains how to use several strategies to spend less on groceries. For example, meal planning, making a list, and knowing the store’s tricks are all easy ways to keep groceries under budget.
Cut Back on Extras
Extras are the categories in your budget that should be easiest to trim since they aren’t essential. That doesn’t mean you have to go without, though! If your preferred form of entertainment these days is TV streaming, choose your favorite service and cancel the others. Then supplement it with free services, like books and movies from the library. Obviously, the list of extras could go on and on, but the key is to find affordable or free substitutes for as many “wants” in your budget as possible.
We probably all wish life could go along without setbacks, but if anything, being in a pandemic is proof that bumps in the road sometimes come out of nowhere. No one is immune to economic hardship, but we can all take proactive steps to protect our finances from downturns – now and for the future.