As the world around us changes thanks to the Covid 19 pandemic, we must also re-group, re-think and re-imagine the way we were managing money so far.
The unprecedented uncertainty faced by millions of people around the globe is testimony to how external events which are out of our control can impact us profoundly.
The common thread for many of us has been the impact of the pandemic on our money lives. Be it medical expenses, job losses thanks to lockdowns or slower business uptick, it’s all happening and it affects our earning, spending and saving cycle.
In order to face future pandemic like situations, the one thing that we are now sure to focus on is our health. Along with this, the pandemic has also spotlighted the importance of prudent money management and choices in order to maintain stability throughout uncertain times. One of the most important aspects of this is ensuring that we have more than enough saved up for a rainy day. If the pandemic experience is anything to go by, a rainy day can last much longer than we expect it to.
A good savings cushion can help you take on uncertainty head on and move forward with minimum damage.
If you think you are already saving enough, then think again. This is an opportune time to bump up your savings given that a lot of frivolous spending on entertainment and disposables is curtailed by virtue of circumstances. Even if there was no exigency, you can still think about ramping up savings to cater to specific goals where the demands have expanded.
1. Cut out the clutter
Firstly, stop spending on things that don’t add value to your life. For example, expensive gifts for friends to show your status or a luxury watch collection or a melange of branded clothes, shoes and accessories. While these acquisitions will make you feel good for some time, the value is fickle. Very soon you will want to add the next one to your collection as contentment dissipates very quickly with such spending. Moreover, you end up adding to wastage as space constraints may lead you to dispose of previously held goods which are in good condition.
Cutting out the clutter is about keeping things simple and using what you already have to the best of it’s potential. This not only helps you spend less and save more but also creates less wastage in your life.
2. Get a side gig
A side gig is extra income from doing something that is unaffected by your primary earning function, be it a job or a business. A businessman in the UK is planning to sell self-painted figurines from popular series or board games to online buyers and hopes to fetch over 500 Pounds each. This is income generated from a hobby or talent that is separate from your main line of work. It could very well be tangential to what you are doing. If you are a successful business person in a niche industry or a successful start-up founder, you might be able to generate side income by indulging in some public speaking.
Having a side income will help you save more too. It keeps you busy and earning beyond the usual salary.
3. Pick a column to spend less on
A typical household budgeting sheet with have several columns with heading like utility spends, fruits and vegetables, eating out, grocery, gifting and so on. Every year pick a column where you think you have been overspending and consciously try to bring down the amount. Have a target to reduce the spend by 20% at first and work your way to the optimal spend according to requirements.
In this manner over time you will reach optimal spending levels across the various columns in your budgeting sheet.
Improving your savings will help you in having that surplus you need to be better prepared to tackle life’s uncertainties.