The financial impact of the COVID-19 pandemic has taken a huge toll on everyone’s lives. As infectious disease sweeps across the globe, people struggle to make ends meet while staying healthy.
Several months of lockdown led to economic recession, which forced many businesses to close down and lay off employees. As a result, many have to look for other sources of income to make ends meet. One example is online selling, which paved the way for the creation of a new digital currency to facilitate contactless transactions.
If you’re one of those people who’s left in a financial rut because of the pandemic, we’ll talk about ways to manage your savings and expenses, whatever the financial crisis that comes your way.
Analyze your spending
Checking in and reassessing your finances from time to time has never been more important, especially with the pandemic going on. A lot of things have changed in how we live our lives, particularly how we save and spend our money.
Devote time to go through all your accounts and find out how much you’ve saved, how spending habits have changed, and the total amount of debts piled up or current liabilities. Breaking down your spending is a smart financial move since it will show if there’s extra room for more savings or if you should minimize spending on usual expenses, such as entertainment or groceries.
Every time you experience major life changes, make it a habit to revisit your budget and decide whether a few adjustments are needed. When another life event comes in your way, you can always go back and make some changes again.
It’s easy to analyze your financial status if you have a digital application to manage your accounts and monitor your spending. There are plenty of budgeting applications at your disposal to help you combine all your accounts in one place. They come with various useful tools and features to manage personal finances and other money management needs. Common features include customized alerts, bill payment reminders, a credit monitoring service, and a loan repayment calculator.
Cut off nonessential subscriptions
If you lost all income sources completely, it’s important to create a cash flow plan immediately. Find out the amount you need to pay for all monthly expenses. Create a list of basic expenses and cut off unnecessary spending or anything you can survive without. This will require you to reach out to your lenders or service providers (e.g., cable subscriptions, phone company, etc.) to figure out other alternatives you have to defer, cancel, or reduce your payments or services for a certain period.
Cancel all nonessential services, memberships, subscriptions, and other unnecessary spending. Find out how much money you’ve allocated in your savings or emergency fund and what you should expect from your unemployment benefits. Suppose your financial situation isn’t enough to cover all expenses for the succeeding months or until you found another job. In that case, it’s time to look at our financial resources, such as credits card, personal loans, or early withdrawal from your retirement fund.
Whether you lost your job or are looking to change your spending habits during this crisis, expect your budget to look different from before.
Planning allows you to cope with any adverse financial situation easily. Don’t just wait for something to happen; start acting now to minimize the impact the pandemic will incur on your finances. The last thing you want is to see to run out of cash without any source to pay for your needs.
You can try exploring financial aid programs you may qualify in, such as food stamps, charities, churches, Medicaid, government assistance, grant programs for small businesses, and other local organizations that offer financial support to low-income families and the unemployed. You can also research information on local government websites about the nearest food pantry or food bank. Don’t let yourself reach the point at which you can no longer buy groceries.
If you’re concerned about your ability to pay your mortgage or rent, you need a clear plan for dealing with worst-case scenarios; whether it means reaching out to a friend or family member, renting out a small space in your home for extra income, or working part-time at a local business.
For credit cardholders who are struggling to pay their bill, talk to your creditor if you can apply for financial hardship assistance or request discounts, a lower interest rate, or a deferment option.
With the right financial mindset, it’s possible to keep your finances in good shape amid the pandemic crisis. Although things may seem tight right now, it’s important to keep your eyes on your goal and take things in stride. Once you get out of this pandemic, the lessons you acquired along the way will help you be a smart spender.