How To Improve Your Finances During A Crisis

save money Aug 11, 2020

I know the headline above will have a lot of people wondering what the heck I am on about. Improve my finances in a crisis? Doesn’t he know what the word crisis means? My finances are in the toilet right now! 

Rest assured, I do understand the pain that some people are going through right now - emotionally, spiritually, physically, socially. The pandemic, unlike some crises before it, has had an impact on all of these areas. Pretty much every part of human life has been touched by this crisis. But, if there is one thing that adds further pain and pressure in all of these areas, it is financial stress.

If you are worrying about money on top of everything else, then we all know that this can have a severe impact on our mental and physical health as well.

However, it doesn’t matter where you are right now. It doesn’t matter how bad things seem. There are always things that you can do to improve your financial situation, regardless of where you are starting from. Whether you are sitting on a fortune or spending your last penny, the strategies below are designed to allow you to take control of your own financial future and start improving your own financial situation from this day forwards.

So, without further ado, here are 3 things that you can do to improve your financial situation, even in the middle of a crisis.


1 – Build A Budget AND a Net Worth Sheet

In my new book, The Millennial Money Masterplan, due to be published in the summer, I walk millennials through a 6 step process to help them find financial freedom. Step 1 in the process is called ‘Tell The Truth’ and, when it comes to money, that means creating a budget.

Dan Sullivan of the Strategic Coach says that “all progress starts by telling the truth” and I believe that is very true. If you want to make progress in any area of your life, money included, then you need to be honest with yourself about where you are now.

Although this can be a painful exercise (admitting if you have made bad money decisions in the past, or looking at just how much debt you are in is generally not particularly fun), it is a vital step on the journey to improving your current situation and, eventually, reaching financial freedom.

This stands to reason; how can you plan the route to where you want to go if you don’t know where you are starting from?

I also think making a budget and a net worth sheet has two other massive benefits when it comes to improving your financial situation as well;

  1. It acts are a benchmark for the progress you have made. When you set out to achieve anything big in life, generally you start somewhere and you make small, baby steps of progress along the way. The first budget and net worth sheet you put together can act as that measuring stick to show you your progress.


  1. If you really commit to the process, it can also act as a yardstick for ‘the worst your finances will ever be’. What I mean by this is when you look at your budget and net worth sheet. It doesn’t matter how good or bad it looks, you can make a commitment to yourself and say “from this day forward, my situation will only improve”.


Building a budget and net worth sheet is easy. There are loads of apps that can help you with this nowadays, but my favourite is still Microsoft Excel. You can find a whole post on budgeting, as well as my free Master Budget Spreadsheet download on my site here.


2 – Create a Debt Repayment Strategy

The pandemic has meant more and more people taking on debt to make ends meet (Governments included!). Although this can be a short-term solution, in the long term, money borrowed has to be paid back, with interest! 

Most people who have debts don’t have any clear strategy to repay them. They often go from month-to-month paying minimum payments in a scattergun approach to whoever is shouting the loudest. Although it can be tempting to bury your head in the sand, implementing a proper debt repayment strategy can give you huge peace of mind and can save you hundreds of dollars in unnecessary interest payments in the process.

When it comes to paying down any debts you have, there are two main strategies I recommend – The Debt Snowball and The Debt Avalanche.

They are both very similar, with one subtle difference and which strategy is for you will depend on your personality type.

The Debt Snowball involves putting all of your borrowings on a list, with the smallest balance first. Here is a really simple example:

Overdraft - $300

Credit Card - $1,200

Loan - $3,600 

The idea behind the debt snowball is that you pay only the minimum payments on everything apart from the smallest debt at the top of the list, with the aim being to pay off the smallest debt as quickly as possible. So, let’s imagine the minimum payment on the credit card was $20 a month, but you have been managing to pay $50 a month. Well, you would reduce that payment down to the minimum $20 and allocate the $30 saved to paying off the overdraft.

Although the Debt Avalanche (more on this in just a sec) is technically the more sensible debt repayment strategy, I recommend The Debt Snowball to most people.

The reason for this is that The Debt Snowball is designed to work with human psychology, not against it. You see, as human beings, we like winning. We like to see success and progress towards our goals. By using the Debt Snowball, you pay off the smallest balances first and you pay them off fastest, given you a small but significant psychological boost. The satisfaction of paying off that smallest balance gives you the motivation to pay off the next debt and so on.

The only downside with The Debt Snowball, is that you might pay a little more interest over the total term. The alternative is The Debt Avalanche.

This time, you focus on interest rates. You put the debts on the list with the highest interest rates first. Continuing our example from above, it might look something like this:

Credit Card - $1,200 – 19.9%

Overdraft - $300 – 9.9%

Loan - $3,600 – 6.9%

Notice how the credit card is now at the top as it has the highest interest rate and is therefore the debt costing you the most.

From here, the strategy is the same – you reduce the monthly payments to the minimum on all debts apart from the one at the top of the list and you focus all of your energy into paying that one off.

Although The Debt Avalanche is the more logical strategy as you pay a little less interest over time, I find more people have success with The Debt Snowball. Human psychology is a powerful thing and that early motivation that comes from celebrating a ‘quick win’ can’t be beat in my book.


3 – Start A Side Hustle

It doesn’t matter if you are currently earning six-figures or just six dollars, if you are looking to improve your financial situation, wouldn’t a bit of extra money in the bank each month make a big difference?

No matter where you are starting from, working a side hustle can be a great way to improve your financial situation.

Starting a side hustle has never been easier, especially with all of the ‘people for hire’ type websites now out there that you can use to offer your services. 

A side hustle can involve anything from highly skilled to completely un-skilled work. If you already have a highly paid skill (perhaps you took a graphic design course at collage or something) then it can be a good idea to leverage that for your side hustle. But, there is plenty of money to be made from dog walking, house maintenance, food delivery – you name it.

Although a side hustle may not be enough to give you a full income, wouldn’t it be great to have a bit more than you have now? If you have recently lost your job or had your hours reduced because of the pandemic, then a side hustle can be a great way to replace at least some of the lost income.

If you are lucky enough to still be working full time, earning an extra $15 a day doing some online website testing might not sound like much, but when it comes to improving your financial situation, every little helps.

That $15 a day becomes $75 a week, becomes over $300 a month! That could make a huge difference to your financial future.

I have a post on my site with 5 side hustles that you can literally start today to begin earning some extra income.


Summing Up

The important thing to bear in mind in any crisis is that crises pass. Although things may be tough at the moment and they are for many people, the darkest hour often comes before the dawn and there is light beginning to show at the end of the tunnel.

Keep your head up, control the controllable and start taking positive action to improve your situation today and before you know it, things will be heading in the right direction.

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