The world is hit by the pandemic, causing economic and health crises at the same time. The situation is the same all around the globe, be it in the UK, Ireland or any other part of the world.
With this pandemic, the priorities have changed from enjoying luxuries to staying alive and healthy. This is followed by managing your finances effectively, as it is an essential ingredient to lead a comfortable life.
Some people, due to the current situation, are going through financial instabilities, while some of them are still enjoying the luxuries of life.
Once you are a part of the financial rate race, you cannot get away with it quickly. Many people have lost their jobs and have become unemployed due to the current situation. Some have their businesses shut down.
To help such people, many banks and financial institutions are offering start-up business loans in the UK to cater to their financial needs.
Consumerism is at its peak and is a way of life nowadays. People having funds can manage to flaunt, but people not belonging to the same category feel pressured to do so.
Taking financial decisions under pressure can have a long term negative impact on your finances and can drown you in a debt quagmire.
If you spend more than what you earn, you are simply living above your finances. Sometimes, we are not able to comprehend our own situation. This blog shares signs to show if you are living above your finances and if you need a readjustment in your financial habits.
- No savings
This 2020 pandemic has taught us a lot of things, from the uncertainty of life to take things for granted and many more life lessons. One of the biggest lessons is to save.
It is not about your income or how much you earn but to save in whatever means you have. Only savings cannot pave the way to being rich, but it definitely paves the way for a strong financial future.
It is advisable to save at least 10% of your total income irrespective of the amount you earn. It is highly fortunate to win a lottery or encounter a bag full of money to sort your finances.
But mostly, everybody has to work hard, and some of us have to slog to make ends meet.
The savings ratio can be altered as per the income. If you have a high income, you can relatively increase your savings fund and go up to 20-25% for your savings.
These savings can be used at the time of emergency or for any investment purpose. Savings should be a way of life and should be practiced conscientiously.
2. Spending to flaunt
Flaunting is the way you live in. If you have bought an iPhone without weighing its actual need, you need to reconsider your decision.
Many people buy expensive wristwatches, gold, perfumes and, many other things to impress other people and be in that league. Many times, people’s lavish way of life is not in sync with their bank accounts.
It is only done to impress the other person. In today’s time of digital world and plastic money, many of us are attracted to people wearing expensive clothes and watches without paying heed to the other person’s behavior and character. In reality, both of them do not like each other.
So is it worth to attract people who are not your good wishers? People who care about you are not attracted to your expensive belongings.
It is essential to analyze your spending motive and realize your worth. Do not let society and other people influence your spending habits. To be socially acceptable, you do not need to spend lavishly and let all your money goes in vain.
3. Paycheck to paycheck
If you are spending all your money before the month-end and waiting for your paycheck, you need to stop. If you are left with no money at the end, you have spent more than what you have earned. Not everybody has the same income levels. Some people may earn higher while some are struggling to fulfill their basic needs. Barring exceptions, we can do better with our incomes and manage them well.
4. No emergency fund
Since lockdown started, we have heard about many people going broke. Most people do not prepare themselves for any emergency. Then at the time of emergency, people go broke and are not able to survive.
It is advisable to save for your retirement and invest some of the money. Apart from your retirement fund and investments, it is advisable to save for any emergency.
An emergency fund saves you from borrowing a loan at the end moment and keeps you debt-free. Many people might feel as their earnings cannot be sufficient for savings.
Though it is right for some, you can start with a small amount and make it a regular habit to have a substantial amount being saved in some time. Once the savings have started, it will be easier to keep on adding amounts to it.