May 27, 2021
Financial Management during Pandemic – 8 Sets of Advice
By : Ellie Brown
From 2019 till today, coronavirus continues to wreak havoc all across the UK and other parts of the world. The financial year 2020-21 started amid the pandemic with an economic catastrophe within businesses and salaried professionals.
The whole situation is in plight with the stock markets hitting a low, unemployment, layoffs, unpaid leaves, and much more. In addition, it is hard to say how long will this continue. Therefore, everyone needs to plan their financial management beforehand to avoid future debts.
How to manage your finances during a pandemic?
Clearly, these are unusual times when you need to plan your finances differently. Here are a few ideal ways that you may try in this period of cataclysm –
- Keep a sizeable fund ready – Considering the uncertainty of this pandemic, you should arrange for a sizeable emergency fund and keep that for a temporary financial crisis. You may lose your job, although hopefully not. Or, you may fall sick and have to take leaves for a few days. In these instances, you’ll be in urgent need of fund. So, it’s better to have savings worth three to six months of expenses.
- Count on liquidity – People tends to keep their savings in banks as FDs, but liquid cash is equally important in these times. It may happen that you fell ill during the weekends and need to be admitted to the hospital. That’s when you’ll need the cash. So, keep more liquidity, and make that accessible to the persons you are living with.
- List down the assets you can liquidate immediately – You never know when and how a financial crisis may arise. So, it is better to keep yourself prepped up for the hard times ahead. Make sure you have a backup plan in case your paycheck is affected due to the global outbreak. One such great idea is to prepare a list of assets that you can liquidate on an instant basis to overcome the scarcity of funds. Your assets will typically include gold, additional property, equity, FDs, etc.
- Decide how to minimize your expenses – A pandemic is not like the regular period when you have a fixed secured income, and you can spend as you like. It’s a difficult time when you should cut down on your expenses. Start by listing down your monthly expenditures, and rank them in the chronology of importance. The least important ones must be off your monthly expense for the time being.
- Go for a tenant loan – If you are staying in a rented property, tenant loans can be of much help. It’s especially important for those tenants who lost their jobs because of the pandemic. On availing of a tenant loan, you need not pay the monthly rents from your savings. Meanwhile, look for another employment. Once you get one, repay the loan amount gradually.
- Buy adequate life insurance – Once you start earning, you should buy many life insurances right away. It is important in anticipation of the fact that you will have liabilities and dependants in the future. Especially when it is a pandemic situation, you should consider term life insurance to protect you and your family shortly.
- Wisely invest in equities – The situation is difficult; everyone needs to invest more in equities than just spending to fulfil their needs. It is not an ideal time for luxury as you can never predict what waits for you in the future. You never know when you will lose the job you have. Therefore, it’s better to trim your mid and small unnecessary expenses and move more funds to equity.
- Don’t just rely on group health cover – It’s nice that your company offers medical insurance, but it will be foolish to rely on the same simply. You should know that loss of a job means loss of group health cover. That’s why you should buy individual health insurance for yourself and your family. It will act as a protection during this pandemic and also ensures the proper use of funds.
These eight unique ideas can help you in a time of exigency. It will ensure security for the hard times approaching and will save your finances for the better.
Are you ready with a backup financial plan?
Make sure you adopt these ideas quickly so that you won’t land in a difficult situation during this pandemic. Start buying adequate health and life insurance, invest more on equity, go for tenant loans, etc. And avoid using credit card as much as possible. In a crucial time like this, you should avoid unnecessary expenses and a lot of debts. The wiser you plan your finances today, the better days you will see in the future.