The pandemic has sent our economy into recession. And although the biggest fight remains at the frontlines of healthcare and in our search for a vaccine, millions of Americans will be worried about their finances.
Of course, not everyone has been equally affected. In business, for instance, mortgage companies can use low rates and a booming real estate market to connect buyers with their dream homes. Likewise, some people have benefited from sound investments or financial planning before the events of 2020; they have little to worry about.
But if you’re like most people, you wouldn’t have been able to foresee or prepare financially for this sort of sudden, sweeping disruption. And now that the world is full of uncertainty, old financial tips and hacks might not work out anymore.
Still, those businesses that have been adversely affected by the pandemic are already making changes to survive. And if there’s a model you can borrow from the business realm and apply to improve your finances, it’s the agile methodology. Here’s how it can work for you.
Where agile works
Agile methods were initially developed for software development. The pace of change and value of customer-driven interactions in this field made it necessary for developers to be able to harness feedback and rapidly translate that into practical change. Instead of getting bogged down by processes and documentation, they could focus on delivering a great product.
Later, the concept of agile methodology spread to other fields, notably in project management. The initial core values became synonymous with the framework of implementation. And thus, businesses have come to apply agile principles more frequently.
Whenever the situation calls for a quick response to urgent change, agile organizations are ready to listen to the voice of the consumer. And due to the empowerment of their employees, they are also the first to use that feedback to adjust to meet the new needs of their audience.
Applications to personal finance
In a post-pandemic world, it isn’t hard to see why such attributes would be extremely valuable to a business. But how can they be applied to your personal finances?
The first agile core value is individuals and interactions over processes and tools. For many people, personal finance is household finance. They share a budget with family members, support kids, and elders. This adjustment simply means getting everyone involved, soliciting their ideas, and learning from those interactions.
If you’re living alone, it could mean networking and consulting a team. Learn from those who are in a better financial position; sound off your ideas with friends. Don’t forget to take time at the outset to remind everyone of the epic story: your ultimate goal or definition of financial success.
These interactions should take place within an agile-derived context. Define your iteration or sprint; for instance, a paycheck or two weeks’ worth of expenses and incomes. Conduct scrums, or daily meetings, where the members of your family or team talk about yesterday’s experiences, today’s goals, and any roadblocks they are facing.
Another agile core value is responding to change, even if it means overhauling the master plan in the middle of progress. For that to happen, you need to be communicating and collaborating openly with each other. Family members need to be able to express their views on how spending or income generation can be improved. You can set the tone with honesty and openness, and empower them to take action on that feedback.
Setting up systems
Increasing the involvement of your partner, parents, or other family members of working age in financial planning can make a lot of sense. But does it help to have kids pitch in? Shouldn’t we be reducing the anxiety they face?
We face an uncertain future, and for any household that’s been just about making ends meet, a sudden change could spell financial disaster. If rent, education, or childcare are no longer affordable, lifestyles, and goals might need to be overhauled. Dipping into your emergency fund or savings account, or selling off jewelry and other valuables, can only get you so far.
The actual value of running your personal finances with agile principles in mind lies in creating a system that works despite upheavals. And that’s where you’ll benefit from giving everyone a voice and a measure of responsibility for the situation. By sharing the anxiety, everyone has a chance to contribute and relieve that burden through some small action.
Flexibility, communication, and collaboration pave the way for the future of businesses. Using those same values, you can turn the challenge of personal finance into an agile team effort. Continuously identify areas for improvement, and revisit and adjust your goals and lifestyle so that they are aligned and sustainable.