The last couple of years has presented a challenge regarding personal finance. The pandemic has brought troubles to the job market, upended the supply chain and healthcare costs, and more. Then 2022 has brought continued inflationary risks, overseas conflicts, and more.
Despite that, here are some solid reminders that can help you stay “fiscally fit,” no matter what external matters may be going on.
Jonathan Pond, writing for Ponderings:
While most of us fear the possibility of suffering investment losses, other losses can also impair our financial wellbeing, including financial emergencies. While it’s impossible to predict when financial exigency might arise (the 2020 pandemic is a quintessential example with inflation in 2022 a runner up) and how much they could set you back, you can be certain that they will occur from time to time. Preparing for these eventualities is essential; otherwise, you risk a painful and perhaps long-lasting financial setback.
Some of the unexpected events that you should plan for according to Pond are:
- Home repairs
- Your vehicle
- Any medical and dental expenses not covered by insurance
- Job loss
- Having to pay for assisted living, home health care, or skilled nursing care
- Financial assistance for children – Pond points out that often parents are usually inclined to help needful adult children, even when they probably shouldn’t be from the financial standpoint.
How Do You Prepare?
Pond mentions that it can be best to have an emergency fund of at least 3-9 months of living expenses saved up if at all possible to help smooth out and ride any rocky waves.
One of my favorite apps, though, for instances like this, when it comes to saving and budgeting, is called You Need a Budget, better known as YNAB. If you have an expense like car insurance that happens every six months, you can take that considerable expense, divide it by six, and then budget accordingly each month.
The basic premise that I think is so handy with YNAB is that it helps you budget money that you have NOW versus what you THINK you may have from the traditional forecasting sense. You’re still giving every dollar a job, in the importance of the popular zero-based budgeting technique, but rather than mapping out the income you think you’ll have, you give every dollar a job now. That way, when you get paid again or have another form of income, you’ll assign those dollars to new jobs and continue building out that buffer and aging out your money.
The YNAB team also has lots of great articles as well, like budgeting when you’re barely getting by as well if you need help there.
If, after perusing their site, you want to try them, be sure to use this link, and we’ll both score a free month! I’m always happy to help answer any questions as well as it’s been one of my favorite pieces of fintech software for years.