A crisis affects everyone. Businesses big or small, families, individuals are affected when the whole country is plunged into a crisis. That’s why it is important to be always mindful of your financial decisions.
Impulsive and unplanned decisions concerning money almost always end up in disaster. It will be to your advantage to be always ready for whatever financial setback that will befall you.
The pandemic has everyone fearful not just for their health but for their finances as well. People left and right are suddenly being laid off. People are getting sick. Companies are declaring bankruptcy. If these possible financial pitfalls keep you awake at night, then it is time to take action.
Work On Your Liquid Savings First
Do not invest in high-risk, high-return investments until you have at least six months’ worth of your budget or salary. You will need a liquid savings account in times of dire need. Maximize your savings by looking for the best high-interest checking accounts or money market accounts. They may not make as much as other investment vehicles, but their values are not volatile and will not dip with the market conditions. This is important because it means that you can withdraw your money anytime without suffering any loss.
Make A Budget
You cannot survive without a budget. Having a budget will let you come to terms if you are making enough for your expenses. If your income is not enough, being aware of it allows you to look for ways to remedy it.
Are there expenses that you can do without? If there are areas where you can reduce, do it. Controlling your daily spending and being frugal can help manage your expenses. This is not the time to indulge in luxuries. Stick only with your needs. Cut back on non-essentials that you can live without. You may think that you need the latest lipstick shade from your favorite brand or the latest gaming console released. But if you still have a vanity full of lipstick or if your console is still doing fine, you can set aside money for your savings.
You can also review your monthly bills and explore where you can cut down. Make a plan on how to save on your electricity bill. Simple habits such as turning off the lights when the room is empty or changing out your light fixtures to LED can do wonders for your electricity bill. If you pay for more than two streaming services, you may consider terminating your other accounts and stick to only one.
Pay Your Credit Card Debts
Your payables should be part of your budget. If you have credit card debts, do not stop paying them. The interest charges that you are paying for your card debts eat up a part of your budget that you can spend on other things. Paying off your credit card debts can free up the money that you can save or invest.
Another way to manage debt is to find a credit card with a lower rate. Most credit card companies allow you to transfer your existing balance when applying for a new card with them. Some cards also allow you to pay your transferred balance in installments at lower interest rates.
Once you have your debts solved, use your credit card sparingly. Use it for emergencies or necessities only and for convenience, such as when you shop online. Do not use it to buy the latest model of your favorite smartphone brand. Avoid new and unnecessary debt; else, your cycle of paying for debt will never end.
Do not forget your insurance coverage.
Now is not the time to play Scrooge on your insurance. Unforeseen events, such as illnesses, accidents, and even death, can take you by surprise and put you and your family in financial trouble. A sudden hospitalization can leave you with a surmounting bill and debt. If you cannot work because of a disability, it can also put your finances in jeopardy.
Be mindful of your insurance coverage and ensure that you are protected from the risks you’re exposed to. That being said, you should also be on the lookout for insurance that can give you value for your money. You may get the same coverage, or even better, at a lower price from a competitor insurer.
Do not hoard.
With lockdown scares during the pandemic, you may easily fall into the false security that hoarding brings. Before you hit the groceries, assess your supplies. Make a list of what you need and how many of it you need for at least two weeks. When you hoard, you will end up with more supplies than you need, with some hitting their expiry dates before you can even use them.
Find additional sources of income.
If your main income source is not enough for your financial obligations, look for ways to earn some extra cash. You can hold a garage sale for the things that you no longer use. If you have some spare time after your nine-to-five, you can take a part-time freelancing job to augment your main income.
The pandemic and the financial crisis scare it brings have forced many people to reexamine their lives and financial situations. Experts see a global depression ahead. Take control of your finances and be mindful of your savings. Save more if you can. Once you have achieved your target liquid savings account to serve as your emergency fund and have paid all your debts, you can start working on your long-term investments.