Many of us benefited from the government’s stimulus payments and a Federal boost which increased unemployment benefits. It was helpful, but we don’t ever really know when and if it will ever happen again. Hoping the government provides us with stimulus to minimize financial hardship and to help us improve our finances isn’t a reliable plan. So, why not create our own stimulus?
There are tried and tested ways to minimize financial hardship when your income drops or is lost entirely. Doing those methods does require some effort and often isn’t easy. And you have to do them when times are better than when they are not. But they work. Here are a couple of thoughts on how you can create a lump sum stimulus and a monthly stimulus.
Lump Sum Stimulus Creation
Build an emergency fund. Often, when we lose income, we receive unemployment and it doesn’t fully replace our lost income. Unfortunately, there are often delays in receiving unemployment. Some will use credit (debt) to fill the gap – but this comes with costs due to interest and possibly fees. Also depending on credit (debt) can place you in a worse position in just a few months or even in less time.
So, achieving the goal of 3 to 6 months of expenses in your emergency fund can greatly improve your financial security–and you have your own stimulus. If that seems like it is too difficult to do, then set smaller goals first.
- A $1,200 stimulus can be achieved in one year by saving $100 a month.
- A $600 stimulus comes by saving $50 a month for a year.
Even smaller amounts make a big difference in financial stability, as a study by FINRA Foundation and SaverLife indicates. Something is better than nothing and little steps can lead to big steps.
Creating a Monthly Stimulus
Monthly stimulus is more money coming in every month or it can be looked at as having more money available every month. While earning more money each month can obviously increase what we have coming in – that can be difficult for us to control and achieve. An alternative is to make debt payments go away. If you have $300 of minimum credit card payments a month, paying them off faster will mean you’ll have an “extra” $300 of funds each month available for something else. Having $300 less in bills if your income is reduced, can make it a bit easier to get through financial hardship.
How do you knock out that debt faster? For most of us there is no easy answer. There are two basic ways to do it: get more income or spend less.
There are options to earn more. If you are working plenty, you probably don’t want to work plenty more. And maybe you can’t. But maybe you can do a temp job or gig for 20 or 40 hours a month and use the income to reduce debt faster. Maybe you can work “extra” one weekend a month. It doesn’t have to be permanent. There is a saying among those who do temp work in the tax preparation industry who often work 60, 80, or more hours a week during tax season. ”It is only 3 months, I can do this for 3 months.”
There are options to spend less. Maybe the other side of the equation is a better fit for you. Look at your expenses. Can you eat out less? Do you need several streaming services–can you stop using one or two? Most of us have things in our budget that we can cut a portion and leave some to enjoy. Again, this doesn’t have to be a permanent sacrifice. You may be able to reach your goal in a few months. Consider shopping around for lower prices. Maybe you can get the same auto insurance coverage for less. Maybe it is time to stop services you don’t use much.
Take control and create your own stimulus! When you do this, you create financial security and reduce your financial stress. If you would like a little help getting this done – or an accountability partner – consider an accredited financial counselor from the Better Financial Counseling Network.
If you would like a free consultation, you can request one here.
Read more on Better: Better’s Best Money Advice for Couples – Better Financial Counseling Network