I may run a digital marketing agency, but I’m also a CPA and work with many accountants. Given the current state of the economy and overall wellbeing of the general population, I can’t help but contribute information on how to stay financially sound during this time. What to do When Money is Tight, here is acomplete guide about that.
If the current state of the economy has you feeling worried about your finances, here are a few quick ways you can get a handle on things:
1. Determine Your Net Income
Simply put, determine how much money are you bringing in and how much are you spending? If you don’t know, now is the time to go back through your past few months. Understand exactly how much money you’re spending each month.
I recommend reviewing the past few months at minimum to get an understanding of what your average net income is.
2. Review your income and expenses from #1 above and adjust them given your current state.
For your income, consider what income may have decreased or will likely be decreasing. Will you be off work even longer? Are you working, but have the potential to be furloughed soon? Consider what amounts you may need to deduct from your top line to get a realistic estimate of how much income you’re really bringing in.
For expenses, remember that your spending habits have likely changed given the current situation. For example, you probably aren’t attending happy hours, grabbing a coffee every morning, driving to work, etc. However, you may increase the number of dollars spent at grocery stores.
Now that you have a realistic picture of your income and expenses, calculate your new average “net income.” Once we have this number, we can start looking for ways to increase our net income using the strategies below.
3. What can you get rid of?
A common one is subscriptions. Do you have subscriptions you don’t use? For example, Amazon recurring subscriptions and app subscriptions are two subscriptions that are often forgotten about. Another one is the gym. While your gym is likely closed right now, consider if you have a gym membership that you never use. If you don’t use it, get rid of it. Take the time to review all recurring subscriptions and cancel any you don’t need or use.
Beyond subscriptions, consider items around your house. Do you have unused purses, clothing, and items that you can sell right now on eBay, Craigslist, Poshmark, or another similar platform? Now is a time to not just get rid of expenses, but it’s also the time to get rid of things you no longer need. Not only will this increase your net income, but it will feel great to free up more space.
4. What can you cut back on?
Review what areas you spend money on that you can cut back on. Remember, some of our expenses will be different during this time. You should have already accounted for these by this point. At this stage, we’re looking for additional expenses we can cut back on.
Some easy ways to cut back on expenses are: buy off-brand items when available, eliminate impulse shopping online and in person (Amazon is the worst for me), go to the grocery store with a set list and don’t purchase items outside of that list (unless you actually need them), cook on date night as opposed to ordering takeout.*
*If you have the resources available to support small businesses and restaurants during this time, please do.
5. What can you negotiate or delay?
You’d likely be surprised at all the bills you can negotiate right now. For example, if rent has you stressed, talk to your landlord about the situation. You may find that they can help you out during this time in need. The same goes for credit card bills. I know when my Apple credit card bill was due, Apple emailed me and said to talk to one of their representatives if I needed to delay my payment.
Review all of your upcoming bills and see what you may negotiate or delay. There is no harm in asking. After all, the worst you can be told is ‘no.’
6. Ask for help.
Most of us dislike asking for help, but if you’re tight on money due to not being able to work (or something else), consider who would help you out, let go of your ego, and just ask. There is no shame in asking for help when it’s needed. When things return to normal and are going well, you can always return the favor or pay it forward.
I hope you found these tips helpful. I’d love to hear from you now – what are your best tips for managing money?
Disclaimer: None of the above is financial or legal advice in any way, shape, or form.
Katie Thomas, CPA
Connect with Katie on LinkedIn:https://www.linkedin.com/in/katiethomascpa/
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