Year 2020. It’s New Year’s eve. The world just can’t wait to step out of the dreadful year, the one that was beyond the imagination of more than 7 billion people. Everyone is rejoicing, hoping that the new year will work like a majestic ointment on the irreparable wounds of millions of families worldwide. This was the year that made people sick, depressed, anxious, broke, paranoid, helpless, and cynical about almost everything around them.
But little did the world know, 2021 would bring back all the misery and suffering from greater vehemence. Consider this- Total new cases of COVID-19 registered on April 13, 2020, were 69,574. Now that we are in 2021, the new COVID-19 cases as of April 13, 2021, are 765,459.
Needless to say, the world is going through perilous vicissitudes of a global virus outbreak that will soon land us into another financial crisis, perhaps greater than the one we witnessed in 2020.
It’s 2021 now and irrespective of how heedless the population in some parts of the world might be, the truth is, this patch is rougher than the one we hit last year.
Apart from mental health and widespread deaths due to the virus outbreak, pandemics took a toll on everyone’s finances. Employees had to face decrement in their paychecks, millions even lost their jobs. Businessmen and workers employed in unorganized sectors had to struggle with worse situations when COVID-19 led lockdown brought the world on hold.
But a year-long episode of hardships and struggles didn’t end here. The virus outbreak is back in complete blow, this time with a greater rate of contamination and a higher death rate. This calls for a need to start managing your finances again given that nationwide lockdowns for months can soon make a comeback.
The economy was beginning to return on the track of swift recovery with the injection of new jobs in the U.S. market and optimistic forecast from the financial moguls like Goldman Sachs. However, if anything, 2020 has taught humans that their projections and plans are worth nothing before nature’s plans. Once again, with the hike in the COVID cases like never before, we are back to square one with even more losses of lives and confinement of people in their homes yet another time.
If you still haven’t started on the finance management for the pandemic, don’t do any more delay. Read below 6 absolutely essential money management tips that will help you sail through the pandemic.
6 Essential Money Management Tips To Sail Through Pandemic
1. Start keeping a tap on your expenses
It is essential to maintain financial records to know exactly how much money is making debit and credit from your bank account, cash receipts, credit cards every month to understand where that money is being spent. And that goes for every moment, not just the crisis, although now it is more fundamental than ever.
So make a note of everything you earn and what you spend, including small expenses, and then do a careful analysis, identifying where it is possible to cut the costs and save, if possible.
2. Start thinking futuristic
Next important step is to create a projection of wealth flow which involves projecting the family’s incomes and expenses for at least the next 12 months.
We know that it is even more challenging for self-employed professionals to measure revenues, so we suggest that a greater expenditure reduction percentage be applied for the crisis phase and that, in three months, it should return to normal.
3. Reduce costs
After assembling the projected flow, observe all fixed costs and evaluate which ones can be postponed or reduced. Many people are talking to suppliers to reduce fixed costs, such as rent, for example.
Consider that the landlord is interested in maintaining the tenant but knows that his income may have fallen at this point. So, negotiate a lower rent temporarily. If he does not accept, propose the difference in installments, with the beginning of the cost in about six months.
4. Automatic debits
Check if you have set your bank account on automatic debits for internet connection, premium accounts of social applications, membership plans, etc. During the normal scenario, these automatic deductions might not bother you much. However, getting a notification of the automated renewal of your golf club membership during a pandemic will obviously vex you to the core.
Now that we are quarantined at home, it is time to get out of inertia and ask for negotiations or even cancel what you no longer use. Money management calls for attention to every tiny factor leading to your expenses.
5. Cash purchases
Ditch your credit card for the pandemic, now. You might not even realize and withing a matter of months, you may end up accumulating hundred thousand worth of debt. Worse, you have no clue what future holds. So, technically, there is no gaurantee if you will be able to pay off those bills.
If you are using the card, avoid splitting monthly expenses, such as groceries and medicines, considering that these bills will be in payments again in the next month.
Additionally, also be carefull with what you are buying and why. Sitting at home all day may urge you to shop online compulsively but this is something that you should avoid at all cost. Pay attention to the existing plots and avoid getting into debt.
6. Pay attention to your budget
This is especially important for people who lost the job or got a decrement. These are the times when we realize why maintaining a stronghold on your budget is essential. When you record the debits and credits on a granular level, you can implement the changes that need to be made, easily. Some of your expenses have, by default, been taken care of like restaurants, travel, clubs, transportation, and other leisure activities.
This is also the phase that can make you realize how much these seemingly small expenses cost you. Variable spending is often a problem for the budget, so go back to spending only if you have everything under control and with the certainty that it fits in your pocket.
For example, for those who live in a rented house, it may be time to renegotiate the amount or even plan to change apartments, if necessary. Often, services end up being higher in a location desired by many. See if it fits in your pocket, and if not, live at the place that you can afford.
We are experiencing a moment of crisis, and it is essential to have money management in place if you are willing to come out of the pandemic unaffected, financially. At these times, it is vital to review expenses and costs. Negotiate with suppliers and pay attention to aid measures imposed by the government.
Also, help the small and medium entrepreneurs. Make payments on time and, if possible, donate to those in need.
Keep your goals Pay attention to good investment opportunities and seek a professional’s help to get through the crisis without significant concerns.