10 Incredible Ways to Plan Your Finances During PandemicNov 16, 2021
Undoubtedly, it is a fact that the pandemic has hit every household hard and the need to plan finances wisely is surmounting. There are several classes of people who have been hurt by this catastrophe. For instance, according to one report, higher-income individuals were able to save money and cut their spending on some non-essential items. In contrast, lower-income families were most affected by the pandemic. In particular, single, and divorced women are facing the most difficult times.
So, if you're in such a loophole, you might be thinking about a way out. That’s the reason I have compiled this list of 10 amazing ways that you can adopt immediately and start managing and planning your finances even amid a pandemic.
Let’s dig in.
Always Prepare a Peace Of Mind Fund
If you don’t know what an emergency fund is, it’s a contingency supply for a period of 3-6 months in case of an unforeseen financial constraint. According to one report, fewer than four in ten Americans aren’t able to save $1000 for any unexpected situation. Therefore, this statistic suggests the importance of an emergency fund.
An emergency fund can cover utilities expenses and bills of a typical household for 3-6 months. After witnessing the blemishing effects of the pandemic, experts suggest that keeping a yearlong emergency fund is advisable.
Finance #1 Rule: Reduce Non-Essential Items
You might be unaware but there are several items in your household which you don't even need. That’s the reason most financial coaches stress the goal of reducing unimportant expenditures the most. Especially, women tend to spend a lot on unnecessary things. For instance, just open your wardrobe and see if you even need any more clothes or footwear?
Here, you should understand that cutting on unnecessary expenses can actually help you save cash that you can use to invest or add to your emergency fund.
Avoid Cancelling Insurance
While the pandemic continues to take a hit on your income, canceling insurance is the last thing you should do. Health and life insurances are the most important at this stressful time.
Therefore, most money coaches will always recommend you keep these insurances. Suppose you get COVID, you'll have to incur testing expenditure, and health insurance can back you up. Therefore, what you should do is sit back and keep your premiums intact because a calamity can strike you anytime, and it is ideal that you have adequate coverage.
Always Keep an Eye Out on The Available Resources
Governments have been coming up with new incentives for the population during this pandemic. For instance, the CARES act in the US extends unemployment benefits, healthcare solutions, and stimulus payment. Similarly, the Canadian government provides relief in terms of cheques and zero interest rates for student loans.
What can you do about it? Contact the relevant agencies and get to know if you qualify for them. It's likely that you'll get aid in any form possible.
Utilize Your Liquid Assets
Responsible women always keep an eye on their precious assets. Therefore, it's better to list down your most liquid assets in stressful times. Liquid assets are those which you can convert to money quickly. As evident from the initial statistics, there was a hit on the monthly stubs of many people. Therefore, it's important to keep other cash options open, including property, vehicle, gold, etc.
Since incomes are reducing during the pandemic, selling these liquid assets will bring in more cash. The surplus cash will allow thriving for plenty of months until things get better soon.
Identify your Debts
According to a Forbes report, there has been a massive increase in personal debts. Therefore, it’s really important that you identify your credit cards and loans because they can create a risk for interest bills. You can reduce the burden of your debts in the following ways:
- If you’re at the risk of missing payment, contact your lender and negotiate the interest rates. Oftentimes, they can lower the rates for a stipulated time.
- Secondly, review all your debts and prioritize the one with the most importance. Also, check for new options on credit cards with your bank to get a hold of the lowest interest rate.
- Go for the balance transfer method. Contact your bank and get hold of a new credit card with no interest rate for plenty of time.
If you work on minimizing your interest rate, you can eliminate a big chunk of your credit payment and reduce the debt burden.
Refinance your Mortgages
Mortgages rates are trending all-time low. Check the Bank rate and know the mortgages rate. Therefore, it’s a better idea to apply for mortgage refinancing. Here, are a few tips that might help you make a wiser decision.
- A mortgage refinancing will replace your previous loan with new terms and conditions, plus a low-interest rate. So, if you apply right now, you can qualify for low rates.
- If you have got a government-backed mortgage, you can’t get foreclosure and you can request forbearance for a stipulated time.
- You can even submit a complaint to get forbearance if you don’t have the means to make ends meet.
Identify New Employment Opportunities
If you’re struck by pandemic hard and even lost your job then don’t worry, there is still a ray of hope!
These days, the freelance market is booming with opportunities, and interestingly, you can level up your skills online for free. You can use your newly acquired skills to earn some extra bucks enough to get you a strong footing.
Besides, if you don't have a passive income source, you can get payments and financial relief as part of the CARES act. Moreover, the authorities are advancing child tax credit to support families during the pandemic.
Learn New Budgeting Techniques
The most typical income allocation is as follows:
- 50% Personal essentials
- 30% Wants (travel and restaurants)
- 20% Savings
You have to reshape it in times of crisis. Essentials will remain there but find stuff like unnecessary subscriptions and cut them off. Identify your wants and cut them off for the time being and focus more on reinvesting in an index or mutual funds, which will get you more income to spend to thrive during a pandemic.
This may come as a surprise to you, but a pandemic is a great time to invest. If you feel uncomfortable, talk to your financial coach, and they'll advise you the same. The market is going low and will remain volatile for the foreseeable future. Therefore, if you pool some of your savings in the stocks, it'll grow up back when life returns to normal.
Having learned all these great tips, you might now understand how important it is to have a financial coach by your side. Nonetheless, money is what runs the world, and you must learn how to manage your finances.
Times have been stressful for many of us. If you're a struggling woman who needs emotional support and psychological peace of handling your finances, then don’t hesitate to take me on this with you. As a financial coach, I aim to help professional women like you manage and plan their finances so they can emerge as financially independent women.
Check out my Facebook group finance babe where I share useful information about planning finances and achieving financial freedom. If you think there's so much going on in your financial life that you want to talk about then feel free to book your free consultation here. Let’s have an honest, heart-to-heart conversation and figure out your action plan.
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