Being the Neighborhood Financial Advisor

woman calculating expenses

Managing your own finances is a lesson that should have been taught to grade school students. The next best time to learn about it is now. In 2019, it was found that 2 % of Americans go into debt just buying their necessities. Due to financial mismanagement, one in every four families is going hungry every day. This issue can either be caused deliberately or not — whether it is caused by their upbringing or their environment.

In your own small community, your next-door neighbor is likely experiencing hunger that you might not even be aware of. Even in city neighborhoods, people can still experience hunger due to poverty. Hunger has so many contributing factors. Hunger is such a taboo topic in communities that people rarely address it. Due to pride, people would rather go hungry than beg for food. Movies like the Pursuit of Happyness and Slumdog Millionaire describe this very situation happening all over the globe.

How can you help those going hungry in your community? How can you start teaching Financial Literacy in your community?

Much like in business planning where outsourcing CFO services is involved, being a personal financial adviser yourself to your neighbors will definitely do them good.

Admission is the First Step

Admitting they have a problem is the first step to solving it. Identifying the issues and breaking down their status apart is vital before they can move on to a better financial situation. You have to make them understand their current financial standing and that it’s okay that they are in the negative zone right now.

The stigma must be removed about talking about a perceived taboo topic. Identifying the trends and developing awareness of what set of factors causes them to go into debt is essential for them to breakthrough. Much like going into therapy, you have to navigate through the problem first before any type of addiction or mental illness can be solved.

Setting a Goal

Setting a goal is an important step in managing their finances. Having a goal will ultimately set up the path they need to take to get out of the financial hole they have gotten themselves into. Make the goal concrete by having it in writing. Merely specifying that they want to get out of the debt trap is too vague.

Having a realistic and attainable goal will make sure that they will abide by every guide they set up for themselves. They will have to make sure that they are on the right path. Being specific with the actual number will help in making the dream more real. Also setting a deadline will make sure that they have urgency in achieving their goals.

cash concept

Planning the Budget

Planning their own budget for every day is a healthy method to keep track of their daily expenses. Laying every penny out and accounting where each of them goes is a beneficial system to rightfully prioritize where their own money should go. Also having a visual aid on where each penny is spent will help them realize how much of their money can go to bad habits. Factoring their luxuries out is easier when their entire pool is laid out.

Budgeting Per Se

Having categories for their budget will highlight which category will get a bigger chunk compared to others. Categories such as Daily Expense, Emergency Fund, Retirement Fund, Debt Payoff Fund, and Savings are more than practical categories you can include in your budgeting plan. Subcategories are welcome as well. Daily expenses describe those necessary for their upkeep and daily living.

For some, this might eat up the majority of their budgets. Emergency Funds are those allotted for crises and predicaments that may suddenly pop up at any minute. This may include the emergency out-of-pocket payouts to repair their own cars when involved in accidents. Emergency funds may take up the smallest percentage of the salary.

Retirement funds are for those who intend to live a comfortable life after decades’ worth of work. While the Debt Payoff Fund is a category that should slowly depreciate over time. The fund should cover the debt you accumulated over the years trying to survive. It should also take up a significant portion of their monthly budgets and should be considered for payments the soonest.

There are many ways you can help your neighbor. However, helping them recover from their financial predicaments can go a long way. With little research, you can be fully equipped to give general financial advice. Organizing short educational sessions with them will help them get back on track to success.

Scroll to Top