The first months of 2020 have been a roller coaster ride when it comes to global news and events. That is now leading to signs - and talk - of economic impacts.
When times change and you’re stressed or worried about what’s coming, the first bit of advice to keep in mind is that now is the time to take care of ourselves the best way possible. Let’s take a look at what that might mean for your personal finances.
Take stock. Think of your personal finances the same way a business might approach its financial plan in times of economic change. Make a note of all your outgoings, and look at it next to your income. Are there areas where you could make savings? Do you have enough savings to cover you for a few weeks if your circumstances change? If not, can you start now? Every little bit will help.
Review your debts. A time of economic change might not be a great time to take on new debts. The flipside is to take a close look at your existing debts for ways you might be able to reduce your repayments or how much interest you’re paying or how long it will take to pay your debts off. A debt consolidation loan could help. Though it is another type of debt, a debt consolidation loan or a refinance loan brings your different debts together into one. That means only one regular payment to budget for. You may also find you’re paying less interest with either a lower rate, or with a shorter term to pay things off. Harmoney has a useful debt consolidation calculator to help you work out what your loan may look like.
Check your credit file. By checking your credit file reasonably regularly (once every three to six months is a good idea) you’re less likely to have any nasty surprises should you want to apply for credit. Your credit file is the comprehensive summary of your credit history compiled by a credit bureau. It is used to determine your credit score and it is used by lenders, from power or phone companies to banks and lenders to work out how likely you are to repay your debts. Keeping on top of what’s in your file and resolving any defaults recorded in it is important as it gives you access to better quality credit when you need it.
Make a budget. Once you have a handle on your debt repayments, your other expenses and your income, it’s time to put together a plan. A budget doesn’t need to about restricting your spending to only “sensible” items, it’s really there to help you reach your financial goals. Those goals could be anything from having enough savings to see you through tough times, or making sure your bills are all paid on time. There’s no strict rules for how you should budget, so tailor it to your own goals and expenses. Try and check in on your plan at least monthly to keep yourself on track.
The best advice of all is try not to panic. The more time you take to get yourself in the best financial position you can, the easier it will be to ride out the highs and lows of economic change.
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This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.