In recent years, the overall global economic outlook has been challenging. The COVID-19 pandemic that began to spread worldwide in early 2020 caused financial hardship for both businesses and individuals alike. Almost overnight, millions of retail and hospitality workers (and in many other sectors of business) found that they could no longer undertake their roles from the physical premises and were at risk of becoming unemployed.
In addition, the last two years have seen a conflict in Ukraine that has caused energy prices and some staple goods to rise in price, which is fueling a developing cost of living crisis in many parts of the Western world. Inflation levels are at their highest in recent decades, which further compounds financial problems for both businesses and private citizens. If you are struggling as an individual or a household to manage your personal finances, this article will be of significant benefit to you. Three unique strategies will be discussed that can help to improve your financial position and allow you to face the future with more confidence.
Create an emergency fund
It is often difficult, if not impossible, to recognize when you will need to pay for unexpected costs that go beyond your normal monthly expenditure. For example, mechanical problems can develop during a single journey in your car, and these may result in the need to pay potentially expensive garage fees to ensure that the vehicle remains roadworthy. In addition, household appliances will eventually break and need to be replaced or repaired and this can also occur without warning. It is vital to take steps to create an emergency fund to provide for such circumstances. Thankfully, this can be easily achieved by moving a small amount of your monthly income into a dedicated savings account.
Consider your monthly income and expenditure and work out what amount you can comfortably move over to the savings account without impacting other financial needs. You can automate this method of transferring funds by setting up a direct debit agreement with your bank. For more information on how to set up an emergency fund, you can do some research online.
Sell unwanted goods online
Many households find that they have unwanted goods that are no longer required. For example, household appliances may be upgraded over time and the old appliance may still be in perfect working condition. When home improvements take place, there may be a need to buy new furniture to fully complete the upgrade, leaving old furniture redundant in the house. Such items can be quickly sold online at sites such as eBay and other large online marketplaces. This can be a great way to raise some additional funds instead of simply disposing of these items via your local council. It is important to factor the shipping costs of these possessions into your selling price, especially when the goods are large or bulky (such as home appliances).
Thankfully, dedicated shipping firms such as Shiply have a wealth of experience in delivering such items and often charge fees that are significantly cheaper than standard rates for sending goods. Take a range of quotes from shipping firms and be sure to accurately specify the dimensions and weight of the item you wish to send. Take a thorough look around your home and ascertain if any unused items would have value to another person. You may find that by selling these items online and keeping delivery costs low with a shipping firm, you can both declutter your home and raise significant amounts of extra money.
Build an investment portfolio
When looking to secure a comfortable long-term financial future, it is important to consider building a diverse portfolio of investments. These can help to create wealth over time, which can be used to fund a higher standard of living when you reach retirement age. Speak to an independent financial advisor who has comprehensive knowledge of the stock market to decide on a portfolio of investments that are suitable to your circumstances.
Remember that volatile investment products (such as cryptocurrencies) may have the potential for high returns over a short period but are far more risky choices than commodities such as gold or index-linked investment products. For long-term investing, it is far better to choose investment products that are proven to increase over time whilst carrying lower levels of risk.
To sum up
In the current challenging financial landscape, it is vitally important to create an emergency fund to provide for unforeseen costs. Raising additional funds can be achieved quickly and easily by selling goods online and using a shipping firm to lower delivery costs for bulky or heavy items. Finally, it is important to consider setting up an investment portfolio to secure your longer-term financial stability.