A recent SurveyMonkey and CNBC survey found that 73% of Americans were experiencing financial stress. Layoff fears, high interest rates and rising prices were key contributors.
When the economy is shaky, good money management is crucial to avoid struggling to cover basic expenses or turning to credit to make ends meet. According to the money expert Rachel Cruze, following some simple practices can even help you financially thrive when times get rough.
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Cruze’s recent YouTube video featured these five steps to avoid going broke and to better manage your money.
Cruze said it can be easy to feel like you have less control and become overly fearful about money if you don’t have a budget.
But once you start using one, you’ll have all those numbers in front of you, giving you a realistic picture of your finances. Plus, you’ll know where each dollar of income goes over the month so you can rein in spending in wasteful areas.
Cruze recommended using the Ramsey Solutions EveryDollar app, which also has helpful financial education tools, but you can use a spreadsheet or a handwritten budget.
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Cruze discussed how some people come up short after each paycheck since they spend excessively and get into debt. This cycle of being in the negative is hard to escape.
Her advice was to quit turning to debt and find a different way to make up for the shortage. For example, you could look at your budget and make cuts or take on a second job.
Once you’re in the positive, you’ll have a better chance of growing your net worth. Plus, you’ll stop losing cash to credit card interest, which averages nearly 22%, per recent Federal Reserve data.
“Before you start paying off debt, you do need a cushion to make sure that you have money when unexpected things come up, so it doesn’t put you back into debt,” Cruze said.
She recommended prioritizing saving $1,000 as soon as possible to give yourself a financial safety net for things like medical bills and big repairs. While that might seem like a big initial goal, finding extra income options will help speed up the process.
A Ramsey Solutions blog post listed several creative ideas, like monetizing your hobby, doing online surveys, renting out your vehicle or using gig apps like Uber or Instacart. Find something you like enough to stick with for the long term.
