COVID-19 had a large impact on many aspects of life for everyone. For many; however, the finances of many Americans were deeply altered by it. Many small businesses felt the blow of restrictions and millions of workers finding themselves either out of a job or working fewer hours. The US government has done its best to help ease the burden on the citizens but it’s not enough to permanently fix the problem. With this, the people must get back up and fight to get a hold of their financial situation.
Financial education is important now in the circumstances we have faced. But it is pivotal that every person becomes financially educated to more effectively handle and create more wealth. If not for themselves, but for their families and generations to come.
With the era of COVID-19 finally coming to a close here in America, it left many in difficult financial situations. Struggling to stay on top of finances and not being able to build wealth because of it is a common situation. Here are some ways you can get control of your finances and build wealth post-COVID:
1. Make a Budget
Every financial advisor worth their salt will give this piece of advice within the first few minutes of discussing wrangling personal finances. This is for good reason. Making a budget allows you to track every single cent that is coming into your household and where it is getting spent. With this, the capability to find and eliminate unnecessary costs becomes easy.
Starting one is easy. There are many apps to help get you started or you can use the tried and true method of writing it down on paper. It is important; however, to recognize that a personalized budget should be made every month. This is so you can tailor your finances to fit the circumstances of each month where unexpected costs may appear.
2. Live Below Your Means
While very simple, in theory, living below one’s needs is much more difficult in practice. Being able to spend less money than you make is essential for future steps to pay debts and build wealth. With this method, you can ensure that money that you need is not spent unnecessarily.
This idea can be implemented using the budget mentioned above. One thing to mention, though, is that excessive spending comes in many unforeseen forms. You could be out shopping and run across a marvellous piece of clothing. If you buy items impulsively like this, it can contribute to more money going out than coming in. Just keep it in the back of your mind when you think of impulse buying.
3. Free Yourself of Debt
Debt is your number one enemy in the world of finances. Accruing debt is, unfortunately, a very common situation that many Americans face. It’s no wonder why with the ease of use that things like credit cards give us. Debt should be avoided at all costs when trying to get ahold of your finances.
One way to avoid debt is to not pay for anything you don’t have money for. Using credit cards to finance things is just a bad idea when in this position. Pay for these things with allocated cash or save up for them, which leads us into the next topic of saving:
4. Start Saving
Once all debts are settled, saving some money is an excellent way to start building wealth. With these savings, you first want to start with an emergency fund. This is a fund that could support you for a while if you came into an unforeseen financial situation. Things like car problems or job instability are examples of this.
You can open a savings account at nearly every bank in America. Shop around, though, for ones that offer you the best opportunities. Things you want to look out for are ease of access, federal insurance, and interest rates to name a few. Getting your money saved into a bank account is going to save you some major financial headaches in the future.
5. Invest for the future
Finally, we come to investing. Now, I know, investing is a very intimidating thing that not many people know how to do. Only around 52.6% of Americans hold any sort of stocks at all. Knowing how to invest is a very important thing to do to build wealth and save for retirement.
There are tons of different ways to invest. The recommended method for everyday people is to just invest in a growth index fund. These index funds, like the S&P 500 for example, mimic the top 500 traded stocks and return around 8-10% interest rates yearly. Investing a steady amount into this (through dollar-cost averaging) could fund your retirement easily.
When this aspect is taken care of, don’t be afraid to branch out and take a look at some different investing styles. Real estate is very popular, but not very good if you’re looking for fast cash. Forex trading (which is investing in the trading of currencies) is an easy method that yields some respectable profits for beginners. Using resources like Traders Union gives you an easy and accessible way to start doing this. Ultimately, there are tons of ways to start investing that any person can take advantage of in this market.