It is hard to manage your budget in these times of crisis, in which we are facing two tremendous challenges: pandemic and hyperinflation. It is hard to balance your stagnant income with the expenses that are skyrocketing, and if you have multiple debts then that will make your budgeting harder.
Budgeting is not just as simple as writing down your income and expenses; it is also an art of balancing your income and expenses to achieve more savings in the future. You need to take into account everything that may affect your budget, such as the inflation rate, interest rate, and current events, as current events and calamities might drive prices much higher.
Here are some tips that will help us manage and balance our budgets:
Just live within your Net Income
Sometimes, our greatest mistake is that we live way beyond our incomes. We also do make a mistake in thinking that our gross income should be the one to be used in creating budgets, but in reality, the one we should consider is our net income, or our take-home pay. We might earn a salary of Php25,000 a month, but remember that there are deductibles such as social security, health insurance, and taxes.
You should also consider taking 10% of your net income and putting it into your emergency fund, and then you can use the rest of your net income for your expenses, debt repayment, insurance premium payments, investments, and savings. You should always increase your emergency fund, as the prices of necessities always increase due to inflation, and medical expenses also skyrocket during a crisis.
Cut Unnecessary Expenses
One thing we should always do is refrain from buying unnecessary things unless we have extra money for them. This is one of the main reasons that we become broke: we sometimes prioritize our wants before our needs, and when we are out of money to buy our needs, we resort to borrowing. With bloated expenses and debts, our lives will become more miserable and problematic.
Increase your Income or Find other Sources of Income
One of the solutions that will help us manage our budgets, but it could be the hardest one, is to increase your income or find other sources of income. It is hard to make your income increase to beat inflation, as most of the time, our income is stagnant.
Some ways you can increase your income are to find freelance jobs, or you can also venture into vlogging or blogging, but remember that it may take some time before you can earn considerable amounts of money from these side hustles. If you are good at talking to people, you might also try online selling.
Find Cheaper and Cost-Efficient Alternative
Prices of all commodities might increase rapidly, especially those branded items, but remember that there is always an alternative that is cheaper and sometimes better than famous brands.
Finding cost-efficient appliances might cost you more upfront, but it will give you more savings in the long run.
Manage and Consolidate your Debt
Having debt is definitely a burden to all of us, but the crisis that hit us in 2020 left us in a situation that forced some of us to go into debt. Lots of businesses had closed, and in turn, lots of people became jobless. If you were unfortunate enough to be infected with the virus, then you were in serious trouble, as it is life-threatening and also very costly.
It is very hard to manage your debts, especially if you have multiple debts. You have to pay on time, but the problem is that your debts might have different due dates and also different interest rates. The best way to get out of that trouble is through debt consolidation. Consolidating your debt is the best way to manage your debt, rather than having multiple long-term debts to worry about. If you want to learn more about debt consolidation, click here.
You should also do research on the interest rates offered by different lending companies before you apply for a loan and find the ones that offer the best terms.
Having your budget well managed will make your life worry-free, and you will have more time and money to use for other, better things. You will also free up more money for other things, such as insurance, investments, and especially leisure.
