You should pay attention to changes in your personal finance this year 2020 and learn from them now. Gain insight on some of the changes you can make to simplify and grow your personal finance.

It’s almost the end of 2020, and the year has been particularly challenging for everyone in terms of personal finances.

You are probably worried about the state of your personal finances after the extraordinary circumstances surrounding 2020, and would like to monitor what are the changes that you have made.

However, this becomes difficult as you have to live day by day, trying to figure out how to survive through the upcoming recession, and stressing over the security of your income and job.

If you know the enemy and know yourself, you need not fear the result of a hundred battles. This is true for yourself in how to manage your personal finance. Find out here below what are some of the personal finance changes that you should learn more about in 2020!

Change #1: Dipping into your hard-earned savings

You would have surely felt the pinch of this year’s financial hardship. You may even need to to take out your hard earned savings to tide you over during the coming hard months of possibly lower salary or joblessness.

As employers are unable to cope with a reduction in business activities, revenue and profits declined and they are forced to reduce wages and let go of employees.

There is an important question that you need to consider when you decide to use your savings to fund your expenditures.

Are you at risk of your employer reducing your salary or your business having significantly lower revenue?

If yes, you need to properly identify the expenditures that are essential for your wellbeing and dip into your savings to make those expenditures. If no, you need to save even more of your income to wade through uncertain periods moving forward.

Change #2: Taking up more side jobs for side income

In an extraordinary year such as 2020, it is no longer sufficient to just rely on your main salary for income to support yourself. With your income possibly declining and your job at risk, you find it more vital to take on more side and part time jobs to diversify your income sources.

If you have lost your job this year, it is very important that you take up part time jobs that provides you with some income as you are transitioning to finding for a new full time job.

If you have a job, it is still vital to diversify your income sources by taking up side jobs to make up for any reduction in your salary or business revenue.

As technology has progressed rapidly over the last decade, there are a multitude of side job opportunities in the market. Some of them include

  • Food and parcel delivery
  • Tutoring and tuition
  • Writing freelance articles

Furthermore, you might be stumbling into new business ventures, which could open up your career opportunities and enhance your livelihood.

Change #3: Spending more on food delivery services

You are stuck at home and you fear the risk of contracting Covid-19 pandemic. You no longer cook as often or eat out as often.

Buying groceries also pose a risk as you will be visiting the grocery shop where everyone is also buying their groceries.

Ordering food delivery services is the safest option for you to prevent contracting Covid-19 in these trying times. However, more often than not, the food options offered by delivery services such as Grab and Food Panda are skewed towards more expensive food.

You find yourself spending more money on food than you did when you cooked or ate out as you had to pay for delivery charges and more expensive food options.

You need to be aware of how switching to food deliveries is affecting your personal finances. Are you spending more or less on your food expenditures now? It could be that you don’t notice how much you are spending as it is so easy to order food via delivery services.

If you are spending much more on food deliveries, take advantage of the deals that is offered by the food apps. For example, you can order from restaurants that are offering discounts and deals for the week. Furthermore, there are some deals that only offer discounts up to RM15 for one transaction, you can take advantage of that by making 2 orders, saving up to RM30.

Remember, every cent counts for your finance.

Change #4: Switching more to online shopping

As there are strict Standard Operating Procedures now in travelling and shopping at online physical retail stores, many of you have resorted to online shopping.

Sites like Shopee and Lazada are witnessing sharp increases in traffic and orders since the imposition of Movement Control Order, and have reacted by offering much more discounts and offers.

This is where you need to be careful of online shopping’s impact on your personal finances. Research from the University of Michigan has indicated that online retailers are using sales tactics and marketing that increases the likelihood of consumers engaging in impulse buying.

While online shopping is much easier for you to purchase things, you need to check whether you are engaging in impulse buying. The first thing to do is to ask yourself whether you are unhealthily buying many things online that are on discount or offer. Then, think about whether you actually needed these things and whether you feel feelings of regret.

If you do, you need to be aware that you are impulse buying and you need to introduce some controls to your time shopping online. Think about what you need to buy first before going online, instead of going online to decide on what you want to buy.

Change #5: Investing into more electronic devices for yourself and your family

There are two main reasons why you might be investing more into electronic devices for yourself and your family.

Firstly, for your work. As most of you are working from home now, the need for a computer and other gadgets has increased, in order for you to do your work and communicate with your colleagues.

The situation gets more dire if you are not provided with company equipment to work from home and you are forced to spend money on them.

Secondly, for your children’s education. As most schools are now closed, most of your children are studying from home and through online classes. They will need their own laptops and electronic devices (smartphone, electronic tabs) to effectively study.

Take note of these investments you are making and probably need to make in the future and incorporate them into your financial planning.

Assess whether your children needs just an electronic device or a laptop to conduct their studies. This difference is important as some classes only require you to attend classes online and submit scanned copies of handwritten homework. However, if it requires them to type their homework out, you would probably need to invest in a laptop for them.

Remember also, you can write these investments off in your income tax for the year, saving yourself some money for taxes.

Change #6: Spending more on online entertainment

Inevitably, as you lose access to forms of entertainment that requires your physical presence such as gym, sports and others, the alternative form of entertainment that you will turn to are online entertainment.

You will be subscribing to online streaming services such as Netflix, Hulu, HBO or televisions channels such as Astro and HyppTV to entertain yourself. In some instances, you will be purchasing movies online also.

As most of these online entertainment have yearly subscriptions, you need to be careful about spending on other forms of physical entertainment after the pandemic is over. It is very likely that you will continue subscribing to these online services after that which will increase your overall expenditures on entertainment.

Prepare a worksheet now to record how much you are spending on your online entertainment and also physical entertainments before the movement control restrictions. If you want to go for badminton after the pandemic is over, you need to cancel on one of your subscriptions to prevent your total spending from increasing.

Conclusion

2020 has been a tough year and probably the worst on record. However, rejoice, as you have managed to survive until now. There are some important lessons that you can learn from the changes in your personal finances here that could better prepare you for the uncertain future. Remember, your personal finance journey is a marathon, not a race. You have to make every lesson count in your personal finance journey.

Get an annual financial health check by talking to a licensed financial planner!

 

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How did your personal finance journey changed in 2020? Let us know in the comments below