10 Money Management Tips That Will Help You During Hard Times

Financial hardship is a pretty common thing with many people. Even millionaires have once faced excruciatingly painful financial crisis in their lives. But, they follow certain money management techniques that help them weather the storm. If you’re going through a hard times as well, it’s time you follow certain finance tips that’ll help you immensely.

Hence, these are the 10 money management tips that will help you during hard times. Also, don’t worry, It’s gonna pass.

(1) Focus On Things You Can Control

When times are hard, it’s human nature to accumulate everything at one place. Because somewhere the mind doesn’t want to lose anything anymore. But, what you have to understand is that you cannot control everything. It’s also not possible to bend everything according to your will. When you accept this fact, you’ll feel better.

One thing you can do when you’re going through a financial crisis is to focus on things that you CAN control. What is the closest you can do to ease your present financial situation? Only you can answer this question. For example, you can stop spending on entertainment with immediate effect, next, you can look for more income opportunities.

Please, don’t go the debt way. Taking a loan is one of the worst decisions you can take when things aren’t right. Yeah, taking a loan will give you an initial relief, but it’ll soon come back to haunt you. Make a rough list of things that you spend on, and the things that you can stop spending with immediate effect. Later, when things normalize a bit, create a budget and stick to it no matter what.

(2) Get Rid Of Negative Money Thoughts

As a kid, I read a sentence that has stayed with me ever since. This: Thought are Things. The more I experience the world, the more I feel it’s true. Thoughts really are things. So is it for money too. So, if you’ve a negative concept about money, like money is bad, then it’s high time you drop it. The quicker you do, the better it is.

One way to drop any negative concept about money is by surrounding yourself with situations and people who are optimistic about money. The next thing that you can do is read, write and visualize an opulent life. Your mind is the most vulnerable during a crisis (whether financial crisis or life crisis). Whatever you think gets cemented in your mind forever. Hence, do whatever you can to get rid of negative money thoughts.

When your outlook is positive, you’ll automatically find ways to make more money. Like attracts like, it’s the universal truth. So, if you’re vibrating at a frequency of “Money is Good,” you’ll automatically attract money from unexpected sources.

(3) Strictly Monitor Your Finances

Now that you’re thinking only the good things about money, let’s jump into monitoring your finances. Because no matter how positively you think about money, it finally boils down to how much you make and how much you spend. This is why budgeting is so crucial. It keeps you on track of all your expenses and stops you from overspending.

In fact, budgeting comes in more handy when you’re going through hard times. As I said before, you’re vulnerable when everything is going against you. And, you know what? You make the worst kind of decisions in these times. Maybe you’re desperate and think of spending a little more than what you should. Spending fat cash will only heal you temporarily, because reality hits you, you’ll feel worse.

Hence, before you spend on things that aren’t necessary, start creating a budget and stick to it. To make it easier, download a budgeting app like Goodbudget.

(4) Switch To Cash Only

Many people prefer online payment, because it’s easy and you don’t have to manage hard cash. It has become even more easier nowadays with tap-to-pay technology. While it’s easier to pay through online payment, you often end up overspending. Yes, cash is hard to manage, but you can see the cash leave your wallet when you spend.

It’s a funny way to manage money, but it works. Suppose you had $500 in your pocket and at the end of shopping spree you’re left with $100, it’s a clear indication that you spent $400. On the other hand, things change when you’re using a credit card. There’s a high chance that you’ll end up spending more than you should.

I learned this by from the book Atomic Habits. James Clear suggests that if you want to get rid off a bad habits then make it harder to access. And, that’s true. So, in this case, since you want to save more money, making it harder to access is a great way. I know it’s easy to take out cash, but it’s obviously harder than using your card.

(5) Prioritize Debt Payment

Falling into debt is one of the worst things that can happen to someone. It’s an endless abyss. Hence, when you’re going through hard times, one thing you can do is prepay you debt. Paying your debt on time is one way to shed off liabilities from your life. Once you do it, you won’t have to think all the time. Also, credit authorities won’t disturb you.

Now, the question is: Which debt should I pay at first? Pay the high-interest debt at first. Those are the real stinging ones! Low term debts with low interest are bearable, but not the short-term with high interest ones.

One thing you MUST remember is to not take another loan to complete the ongoing one. It’s a miscalculation. You’re only jumping from one sinking ship to another. Chances are, you’ll lose more than you’ll gain. Unless it’s really bugging you, don’t go for an another loan. Rather, if possible, try to increase your income. That would help you more in the long run.

(6) Be Mindful Of Entertainment Expenses

Suppose you don’t want to shift to cash and just stick to your credit card, then you’ll have to be incredibly mindful of your expenses. One great way to do it is the set a send limit for your credit card. Setting a limit on your credit card expenses will automatically block you from overspending.

An another way is to use a debit card. Unlike a credit card, your debit card won’t work if your bank doesn’t have money. This is the time when you have to everything under your control to stop overspending. Initially managing money is going to be complex and frustration, but later you’ll instinctively know what to do. You’ll know what to purchase and what not to.

Sometime, you would want to spend money on entertainment purposes, and that’s absolutely fine. Only thing to keep in mind is to follow your budget. Because, if you don’t, finance issues are going to haunt you later.

(7) Watch Out For Scams

Scam artists thrive on fear. They know how to manipulate innocent people and convince them to handover their live-savings. When you’re going through a hard time, you’re most vulnerable to finance scams. Lately, all the crypto scams happening (FTX) all over the world is a major proof of desperate people wanting to make extra money.

Trust me, these scams will only rise every year because of the worldwide financial crisis. People lose the value of their hard-earned money to inflation, and since they are left with very little opportunities, they try to take the short route. They try their hands on stock trading, cryptocurrency trading, scam side hustles, and what not.

You have to stay away from any Get Rich Quick schemes. Unfortunately, people still believe that these ideas work. Honestly, Get Rich Quick schemes work, but Get Rich Easy don’t. This is one misconception people have. They try to be rich quick, but they don’t want to put in the effort.

So, this is what you should do:

(1) Don’t fall for scams
(2) If you want to get rich quick, put in the hard work. Work 10x harder and smarter than everyone

(8) Create Emergency Fund

When it comes to the word “emergency,” most of us thinks about a medical emergency. Unfortunately, that’s the kind of emergency we have gotten accustomed to. Well, let me tell you something. Most people only take health emergency seriously, which is good. But, what about financial emergency? What happens if you’re suddenly fired? or your business hits a roadblock? How will you manage it? An emergency fund acts like a cushion that protects you from hard landing when you fall. How hurt you’re completely depends on how good is your emergency fund.

Keep aside some money from your monthly income. You can either use this money to buy stocks, bonds, or keep them as liquid asset (cash). Don’t use this money for entertainment purpose because you’ll literally be playing with fire. An emergency fund also gives you mental peace. Subconsciously you know that no matter what happens, you won’t have to sleep empty stomach. This sense of security is essential to lead a peaceful and happy life.

(9) Diversify Income Source

Be absolutely honest – How many sources of income do you have? If it’s multiple, and all of them are making money, then I suppose this section of not for you. But, if you’re only dependent on one income source, it’s time diversify. You don’t have to fret, but you need to hustle. Those good times are gone when everyone only had one job which they continued for life. Economy is so jumbled today that it’s almost impossible to live on a single job.

While you’re continuing your job, try to shift to other passive income sources. I won’t recommend you to go the freelancer way because it’s a 100% active income source. You won’t have the time to freelance while at your job. You can, though, start creating something from your present expertise. Blogging and affiliate income are the two best passive income sources out there. The other is dividend from stocks.

Diversified income source is the secret sauce of the millionaires. They NEVER depend on one source of income. Even Bill Gates, the co-founder of Microsoft shifted from Windows OS to other sources of income. Depending on only one source of income is dangerous. Everything crumbles if that income source goes down.

(10) Follow The 80/20 Principle

Finally, this is the last piece of advice in this long list. You might have heard about the 80/20 principle. In simplest terms, the 80/20 principle states that 20% of the things cause 80% of results. You’ll find this pattern everywhere. 20% of a company’s employee make 80% of the salary. 80% of a company’s profit is made by 20% of their products.

But how can you use the 80/20 principle in managing your money? Here’s how: Save 20% of your monthly income and use spend 80% of it for regular expenses. You can also do the vice-verse if you want to live frugally today and focus more on securing your future. Though it’s not always possible to save 80% of your monthly income, but you have to do the impossible when situations are unpredictable and you’re going through tough times financially.

In the end, I’ll also recommend you to read The 80/20 Principle. You’ll love learning from this book. Revisit the book whenever you want to learn more about business management and life management.