When times are tough and uncertainty is running high, it helps to take specific action.

The coronavirus pandemic is still wreaking havoc across the globe. The 2020-21 fiscal year began with a lockdown, and many of us are already working from home. Even still, the burning issue on everyone’s mind is: “How safe is my job?”

The economy is taking a beating. Civil aviation has been heavily struck by the pandemic, with many personnel already laid off or placed on unpaid leave. Several other industries have taken similar steps or are considering doing so. The stock market is at all-time lows, the lowest it’s been since the 1987 market meltdown. Your equity assets may have lost at least 25% to 30% of their value, if not more.

It’s easy to feel overwhelmed in times of uncertainty. And it’s no surprise that many of us are feeling that way, with the breakout of COVID-19, continuously shifting behaviour expectations to contain the virus (when will schools and offices re-open?), and significant market volatility. However, while many families are concerned about the long-term effects of the crisis on their jobs and income, things are not as out of hand as they appear.

There are certain steps we may take to safeguard our finances, get a hold of our personal money management and refine, lessen and even negate our financial risk during these troubled times.

#1. Maximise Your Liquid Savings

In a crisis, cash accounts such as checking, savings, and money market accounts, as well as a fixed deposit (FD) and short-term government investments, will be the most helpful. You should start with these resources, unlike stocks, index funds, exchange-traded funds (ETFs), and other financial instruments which you may have invested in as their value does not fluctuate with market conditions. This means you can take your money out at any time and not lose any money.

Apart from CDs and retirement accounts, which normally require you to sacrifice some of the interest you’ve earned if you shut them early, you won’t suffer early withdrawal penalties or pay tax penalties when you withdraw your money. Wait until you have several months’ worth of cash in liquid accounts before investing in stocks or other higher-risk assets.

#2. Connect with Your Money Mindset

Too many of us are suffering in silence at the moment, feeling defeated and pressured by the unforeseen circumstances that have unfolded. Maybe you were laid off? Maybe your business was shut down? Either way, it’s time to recollect yourself and regain control over your mindset.

Relax both your body and your thoughts. Slow your movements down, meditate for 5 minutes, or practice grounding by focusing on your feet on the floor, your body in your chair, and counting your breaths. Then, when you let your money worries arise, try not to pass judgment on them. Is it beneficial to expend mental energy berating oneself for past decisions? Is it possible that you might have predicted this crisis? What would you say to a friend or a child who said they didn’t think they’d ever be able to succeed?

Create a money mantra that will benefit you. Then, when you’re ready to move forward and feel more at ease, practice taking baby moves.

#3. Review Your Budget & Know Where Cuts Can Be Made

It’s now more vital than ever to understand where your money is going. How much money do you spend monthly? Are there any expenses that you can eliminate? Many people associate budgeting with thoughts of deprivation. It appears to be the opposite of enjoyable. However, this does not have to be the case.

Being more deliberate with your spending now can help you save money for the things that matter most to you. Rather than overpaying on non-essentials now and later needing to make substantial changes.

To update your budget, start by examining your spending for the past two to three months to see just how much you’ve spent. Consciously choose to track your spending to help you better identify your spending patterns to be better aware of your cash flow and alternatives.

#4. Pay Down Your Credit Card Debt

If you have credit card debt, the interest rates you must pay each month are likely to consume a large chunk of your monthly budget.

You will minimise your monthly financial commitments and put yourself in a better position to start creating a better nest egg if you make it a priority to pay down your credit card debt. You can put your money toward more vital things if you don’t have to pay interest.

For this reason, credit and risk management is a crucial practice of good financial habits. Never leave yourself hanging with more debt than you can handle, otherwise unforeseen circumstances can throw off your usual payment routines and you’ll be left to suffer the consequences.

Before this happens, focus all your energy on getting out of debt and staying out of debt.

#5. Keep Up With Routine Maintenance

You may discover problems early and prevent costly repairs and medical bills if you keep the pieces of your automobile, home, and physical health in good working order. It’s less expensive to fill a cavity than to have a root canal, and it’s easier to replace a few pieces of wood than to have your house screened for termites.

It’s also better to eat healthily and exercise than to end up needing expensive diabetes or heart disease treatments. You may believe you don’t have the time or money to deal with these issues daily but ignoring them can lead to far larger time and financial interruptions.

#6. Look for Ways to Earn Extra Cash

In times of crisis, many people resort to reinforcing their income with additional revenue streams, and rightfully so. The rising popularity of the gig economy and accessibility to other sources of monetisation means that earning extra cash has never been easier.

If you’re looking for extra money, then there’s always the option of starting a side hustle.  There are so many ways to make a little cash from different revenue sources, most of which are not difficult to set up. Offer services (like tutoring or freelancing), or get into product selling (selling items preloved items or drop-shipping online). You could even find a second part time job (possibly even remote work), or look for various credit card and bank account opening bonuses.

Although the money you receive from these activities may appear modest in comparison to what you earn from your main work, even small amounts might add up to something important over time.

#7. Take Stock of Your Non-Cash Assets and Maximise Their Value

Identifying all your options could be part of being prepared. If you need to travel, do you have frequent flyer miles you can use? Do you have any spare food in your house that you could utilise to save money on groceries? Do you have any gift cards lying around that you could use for fun or sell for money?

Do you have credit card rewards that you can exchange for gift cards? All these assets can help you save money monthly, but only if you know what you have and how to put it to good use. Knowing what you have might also help you avoid purchasing items you don’t require.

Conclusion

Personal money management is such a critical point of focus right now, especially with the economic situation. Just remember that financial crisis scenarios are nothing new, and many people have pulled through time and time again. Many issues can be rectified as long as you stay patient and composed, and build a solid strategy around your next few steps towards regaining financial control.

 

What other strategies have you employed to cope with the current times?

 

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