Managing Money in the Midst of Transition

What do you do when you are in transition, particularly a career or business transition, that doesn’t allow you to manage your money as you would otherwise? After following my husband through a rather long and unplanned career change, I learned a few things about managing money more consciously during such challenging times.

As lovely as it would be to make a career change bolstered by a year’s worth of savings and a neatly trimmed expense budget, it’s not always realistic. Oftentimes, when people decide to change careers or start up new business ventures, they are fairly deep in their desperation to get out of their current situation. Having all your ducks in a row financially may not be the primary concern. After all, career change is about much more than finances and should be evaluated by long-term physical, emotional, psychological, and spiritual gains, as well monetary realities.

In our case, after a number of years, lots of reflection, and a few costly mistakes, my husband and I decided that the career change was positive overall, regardless of financial setbacks.

Here are a few ideas we learned to help manage finances while transitioning in life that might minimize or eliminate some of those challenges:

1. Know The Numbers. First and foremost, look into all of your hard finances, including: calculating what you earn from all sources; knowing how much you spend and on what; researching what kind of debt, savings, and investments you have overall; determining your credit score; and examining the employer-provided benefits you might need to cover. After crunching the numbers, write the information down in one spot so you can refer to it at a moment’s notice.

2. Make Sacrifices. Even if you have substantial savings, find ways to cut back and reduce your cost of living. It is best to alter aspects of your lifestyle early, before a real need for money arises. You may actually find that you won’t want to go back to some of the excessive spending once you make more money.

3. Maintain an Investment Strategy. Create and maintain an investment strategy so you remain connected to wealth and abundance during your transition. Choose something meaningful to you, even if it is not a number one priority. If saving for your child’s college fund is the most important thing to save for, do that instead of adding to your retirement fund. Transitioning is already an insecure time; keep stability by saving for something that matters the most to you.

4. Find Long-Term Financing. If you need to borrow money for a business investment, try to find long term financing so that large amounts do not need to be repaid before the business is profitable. Bank loans or equity loans that can be repaid over several years will give you breathing room to build cash flow and spread the payments over time.

5. Keep Life Liquid. Create access to your money. This is not the time to tie up your funds in investments that are difficult or costly to access. Liquid money is most useful during transitions.

6. Set a Limit. Establish a threshold of cash reserves that you will not go below. That money is not available for anything- especially not for investing in the new business. It is only to be used if a true emergency arises.

It is important to think outside the box during this interim time and give yourself permission to take some risks while playing the money game with a new set of rules. Most of all, pay close attention to your finances – this will give you the best shot possible in order to pursue your goals.

Reasons for Budgeting

Some people might say, why should I have a budget? Are there any real benefits to it? Others might say it’s too late for a budget for me in my current situation, there’s no hope. But there are many reasons for creating a budget. Can it help give me obtain resources? The truth is that a working and active hands on budget can be extremely helpful and beneficial. Some of the many reasons for budgeting are practical information, mental awareness and forethought.

The practical information from doing budgeting causes the mind to consider or take a closer look at how our money is being used. Another word, is this item necessary? Or Do I really need to get that done right now? Maybe I should wait a little longer on that one. Or you might remember, something like, I have an old one of those in the garage, it that works just fine. I think I will pull it out next week and clean it up.

Some other information may help us to see a history or a pattern of our expenses. This information may cause us to make an adjustment for the better or consider a more reasonable path. The working budget can open these doors to us. I heard a statement on TV one day that said information is power. So weekly, monthly and sometimes daily budgeting is a real benefit.

If you are married, the excuse that my wife or husband manages the money can be a detrimental. The whole family unit will suffer behind that kind of thinking. Budgets are for everyone.

As for as the mental awareness of the budgeting, it’s just that, being aware of how much money is coming into our households. There is perhaps no better way to do this than to write it down. Society, has just got away from the ideal of putting pen to paper, for some reason. There are definitely many benefits to physically writing something down. One area were I found this extremely help is in making a budget. There is something about the mental activity of doing basic math that exercises our minds. It draws in our focus on what we are doing.

This awareness ties into the many areas or categories for creating a budget. What happens with budgeting sometimes is that we are unaware of or miss some needed categories. Which can throw our budget off a little or a lot depending on how much was missed or left out. This is another reason for creating a solid, hands on budget. Your awareness of budgeting will only continue to increase if you continue to hammer at it and review it with frequent and regular intervals.

Forethought, is perhaps one of the key reasons for having a budget. The dictionary defines, forethought as a thinking beforehand, foresight. So, when we really apply ourselves to making a real, practical budget. We will develop a mindset and occasionally might say to ourselves. Do I really need that right now? Or I can’t buy that right now because my son’s tuition payment is due next month. Or, you might say, I am moving next month to extent that TV service now would not make sense.
As stated earlier, just doing a practical working budget and maintaining it will cause one to develop a keen foresight to what is really needed and what is not.

Additionally, many of the reasoning behind doing a budget relate also to commonsense. It is very practical to sit down, and write out what I have coming in? and what have going out? and what I need to live on? And what is left?

These are just a few of the reasons for having a real budget, not just in name only.

How to Control Your Bad Money Habits

Changing your bad money habits does not come easy, but it is also not a difficult task. One thing that is very important when it comes to changing your bad money habits and controlling your finance is, taking a firm decision, and maintaining self-discipline to follow through it.

This article contains some things you must consider if you want to be able to change your bad money habits.

Make a Decision

Changing your bad money habits would require you to first make a critical decision in your life whether you want to change your bad money habits or not. You cannot change your bad money habits without first resolving to do so.

Taking charge and controlling your finances will afford you the power to reshape your life positively. Making the resolve in your heart to change your bad money habits is the first step, but it does not end there. What is more important is your decision to stay committed and determined every single day.

How far down have you gone?
When it comes to money challenges, one problem that is very peculiar is the fact that the moment you start making financial mistakes, things begin to start piling up quickly. If you leave your financial mistakes for too long without attending to them, things may start going downhill.

How then do you get a clue as to how far down you have gone? Honestly, consider the following questions:
• Do you make a habit of paying your bills late?
• Have you pushed aside some basic financial expenses due to insufficient funds?
• Do you often spend more than your income allows?

Managing your Money

You do not have to start living below your means before you can start taking charge of your financial situations. You do not have to start giving up your daily cup of coffee before you can assume control over your finances. All that is required from you is the ability to master the art of self-control and postpone pleasure and focus on the more important things. You must understand the art of getting into good debts, rather than bad debts; and know how to take advantage of them.

Managing your Debt

The real culprit in your financial struggle is not debt. There is the good debt, and then there is the bad debt.

Good debt is the debt you incur in investing in assets, which in turn makes you some more money. Bad debt, on the other hand, takes money away from you. You spend bad debt on pleasurable things such as cars, and clothes; which do not necessarily make you more money in return. You must understand the difference between good debt and bad debt.

You do not have to start living below your means to take control of your finances; rather, you must seek to enlarge your means. This, you can do by acquiring assets that can sufficiently generate you more income, which will be able to cater for your needs.

Pay yourself

The idea behind this is, whatever money you receive from all your sources of income such as salary, gift, or tax refund; you must remove 30% for yourself. Whatever is left, share it between your savings account (as your rainy day fund), and your investment account.

You can start today, and make it a lifelong habit of changing your bad money habits.

Money Saving Tips

Living from paycheck-to-paycheck, many neglected the value of having savings until unforeseen circumstances arise that made them not look at money the same way again.

But why let an unfortunate happening occur in your life just to learn its lesson and meaning when, by doing small but frequent steps, you distance yourself to such impending trouble, perceived or otherwise.

Here are some money-saving tips that could save you from any future calamity involving money:

1. Open a Dedicated Savings Account

Like any first step towards the path of making some savings, opening your own for savings-only account is a must. Unlike your primary banking account which you use to deposit and withdraw money from, this dedicated savings account is strictly for money depositions only.

For optimum benefits regarding interest rate, look for a bank which offers “higher-than-inflation” growth rate, which is something you might have to personally ask, if not endorsed to you.

Savings Account

2. Cut Out Unwanted Expenses

Be it a monthly service subscription you no longer see as beneficial to you or a habit that just drains your money, many are guilty about spending on something on a monthly basis that they can really live without.

Part of keeping yourself free from unwanted expenses is by knowing which expenses are worth keeping from which are not and do the necessary steps in trimming those that are from the latter.

3. Be Systematic

If you are still unused to the idea of making a saving out of your every income, chance is good that your first few attempts at stashing some money on the side may be inconsistent and irregular at least.

But if you are serious in saving some money for future considerations, sometimes sticking to a tried-and-tested formula may be a good start at disciplining yourself about money.

One such popular formula that is becoming a cliché among money-conscious individuals is the “80-20” rule which suggests saving 20% of your every income, regardless how small, while freely spending on the 80%.

expense

4. Learn How to Invest

Let your money work for you. Don’t go into get-rich-quick investment scam and promised very high ROI (Return of Investment). It’s possible to get high return in Forex trading and stock trading but there’s no guarantee that you will continuously gain due to up and down of the market.

There’s always a risk in every investment. Read books, attend seminars and courses about investing. Try to learn short term and long term investment, high yield investment, stocks, mutual fund, UITF.

Know the difference between Investing and Trading. Investing is long-term, you will buy, hold and sell after several years. Trading is short-term, which means if I buy today then sell after few days, weeks, months. In Forex trading, other traders buy and sell within seconds, minutes and hours.

invest

5. Earn Some Money on the Side

With so many channels you can tap-online, mobile devices, or in real-life scenario-making money has been made easier so long as you have access to these means.

When you are having trouble making ends meet so as to give way for savings, sometimes generating multiple income streams may be the better option just to save.

Tap on whichever is accessible to you such as selling no longer used goods or offering service as a freelance and make full sure that no matter how much you are earning, you keep some for your future self to benefit from.