Facing Your Finances During COVID-19
Simple adjustments to reduce anxiety and increase productivity
Some of the most frustrating, least enjoyable tasks for individuals and businesses alike are related to accounting and finance. It’s a topic that can be overwhelming, confusing, and downright scary at times when you avoid it for too long. For most people, avoidance is often the go-to strategy and financial procrastination has long been a common affliction.
The days of putting our heads in the sand are numbered thanks to a global pandemic that is forcing entrepreneurs and their employees to rapidly change and adjust. Businesses can no longer rely on their past experience to predict how much revenue they will earn. Employees are no longer certain they will have a reliable paycheck, and no one knows where and when to cut expenses if they fall short of expectations. Then there’s the added complexity of considering potential economic stimulus funds, loans, grants, and the stipulations that govern how you manage and spend this money.
It’s all enough to make anyone’s head spin, but is it actually motivating anyone to confront their new financial reality, alter spending habits, and plan for the future? Not exactly.
Many Americans have spent this unseasonably slow summer struggling to adjust to life at home. According to a recent article in Fast Company, gloomy outlooks and constant distractions are causing a high rate of burnout and procrastination, despite our best intentions to focus on neglected tasks and take advantage of our commute-free workdays. Another driving force of procrastination is the avoidance of negative outcomes, which helps explain the tendency to put off financial tasks specifically. No one likes confronting bad news, especially when it involves money. So how do we stop, or at least mitigate the tendency to put our collective heads in the sand at this critical juncture?
It is important for anyone with this habit to remember that avoidance of negative financial outcomes will be strongly reduced by the simple act of paying attention. If you can track your finances, you can plan ahead, act earlier, and avoid a slippery slope that would cause greater financial hardship. This is especially true during uncertain economic times when change occurs more rapidly than normal. Knowing your numbers also provides a sense of control, a feeling many are particularly craving since the COVID-19 pandemic.
So what exactly counts as paying attention? Business owners and individuals often look at their bank balances but have no understanding of how they got there or what to expect the following month. The regular task of personal financial management or bookkeeping on a weekly or, at minimum, monthly basis, helps provide more clarity, providing detailed insight about how your revenue and expenses are responding to your financial decisions and external economic conditions. You can accomplish this with something as simple as a personal expense app like Mint or if you are a small business, accounting software like Quickbooks. Once you track your financial activity on a consistent basis, you can then build out a basic budget, and start planning ahead for the future.
Ironically, these are basic recommendations most people know they should follow but tend to procrastinate for the same reasons we mentioned earlier. If you are overly concerned your financial records will report bad news, you are likely to neglect your finances and ultimately make this fear a self-fulfilling prophecy. So how do you break the habit?
To avoid this negative loop, remind yourself to stay consistent and focus on the day-to-day process of money management. If you can monitor your finances in smaller time increments, the outcomes become less dramatic and easier to accept. The ultimate goal is to use this process to conquer the anxiety commonly associated with finances. You may not instinctively think of money management as a happy activity, but the more you pay attention and learn, you will worry less and be better equipped to make smart decisions.
If you get overwhelmed, ask for help from a qualified bookkeeper or accounting professional. They can help translate your numbers, take on some of the day-to-day administrative tasks, and allow you to focus on the positive feeling of gaining control. You may not be able to cure all the stress of COVID-19, but with a little mindfulness, you can turn the regular routine of financial management into a tool to reduce anxiety make financial procrastination a thing of the past.
Firm Numbers is dedicated to helping pull entrepreneurs out of decision-making based on emotion and get the necessary data to objectively run their business. Book a free consultation online to find out how our bookkeeping and accounting packages can help you be the boss, not the bookkeeper.
