7 Things You Should Do To Manage Your Finances in Difficult Times

When the economy turns south and times are tough, it can be hard to get a handle on your finances. Being proactive and planning for uncertainty can help you avoid a lot of stress and anxiety while protecting your assets. There are several things you can do to manage your finances during difficult times. 

1. Understand How Much You Actually Earn

The very first thing you need to do when evaluating your financial picture is to understand how much you truly earn. Sit down with several bank statements and go through them. Mark any deposits and make a note about where they come from. Then turn your attention to a couple of recent pay stubs. Look at your gross and net amounts, and make a note of any deductions that are taken out. In a pinch, you might be able to shuffle one or more of these. Adjusting your tax withholding rate might not leave you with a big refund in the spring, but it can result in more cash in your pocket every week. 

2. Evaluate Your Spending Habits

While you have your bank statements out, take a look at where you are swiping your debit card. Making little changes to spending habits can have a big impact on your finances. Small purchases like a morning coffee on the way to work can really add up over time. Instead of hitting the drive through, invest in a refillable mug and take a few minutes to brew your own latte before you head out. When things are looking up you can resume your habits, but you might find the extra money you are saving is worth it. 

3. Look for Discounts

There is only so much cutting back that you can do. No matter how tight things are, you will still need to purchase basics like food, medicines, and utilities. There are discounts for pretty much everything you buy and use. In addition to using coupons and discount codes, start shopping around for more affordable utility and service providers. Call your internet and phone companies and see if they can lower your rates or if they have a less-costly package you can switch to. Do a quick web search for auto insurance near me and see how much you can save. 

4. Build an Emergency Fund

This is not the same as a rainy day fund, which can be used for extras like a new car or vacation. This is for true emergencies. Things like home repairs, medical bills, insurance deductibles will get paid for from the emergency fund. Set aside money every paycheck to go into this account. Decide what you can afford to set aside, and then schedule automatic transfers to make sure you are saving. This will help you avoid taking on debt if an emergency does occur. 

5. Pay Down Your Debt

There are so many reasons to avoid debt, but it is a reality for many people. Paying high interest on credit card balances is like throwing money away. Always make the minimum payments on any balances to avoid fees, increased interest rates and a negative hit to your credit. Work to pay them down as quickly as you can. The debt snowball and debt avalanche methods are both very popular and you may find success with one of them.  

6. Monitor Your Credit Report

The information on your credit report can affect your ability to borrow money. For that reason, you want to be sure it is accurate and up to date. You are entitled to a free copy of your credit report from each of the three monitoring companies every year, so take advantage of that by requesting them through the FTC. 

7. Keep an Eye on the Future

Times won't stay tough forever. Keep your eye toward the future by setting a financial goal to work toward. This will help you stay focused on what matters most to you.

The key to weathering brought times is to have a firm grasp on how much money comes in and goes out of your household. This will allow you to take the steps necessary to control spending, maximize savings and look toward a secure financial future.