What Is An Effective Financial Planning During The Pandemic Covid-19?
We live in turbulent times and witness the changes that have a significant impact on our lives, especially on our finances. You might have felt during this pandemic like “a rug was pulled out from beneath you.” Don’t worry, you are not the only one. Many businesses have suffered due to the unfortunate lockdown measures as well as employees who lost their long-term jobs.
However, industry leaders and responsible individuals have one thing in common. They all looked for tips on financial planning during the pandemic and started making constructive decisions. You also should think about protecting your career you have been building for years and your monthly budget. Luckily, there are proven steps that will guarantee your financial security now.
Let’s scan together a guide on effective financial planning that will help you minimize the covid-19 loss!
1. Build up your emergency fund
The emergency savings fund is important now more than ever. It is advisable to save three to six months’ worth of expenses to prepare for the uncertainty. In the case of a pandemic, the smartest move would be to save up to a year’s worth of expenses as it represents the most unstable economic as well as social period of our lives.
Create a last hope fund that will help you get rid of the current massive stress and go through the period of crises smoothly. Another smart move is to start cutting nonessential expenses and add that saved money to your emergency fund.
2. Take a second look at your debt strategy
Accumulating debt is never recommended. And you should especially avoid carrying high-interest credit card debt. There is a regular stock market volatility due to which interest rates can fall sharply. This scenario is especially critical during a pandemic when there is a high risk of the global market collapse.
Thus, now it is a time to refinance your loans at lower rates to survive. As a part of the efficient financial planning, you should opt for a balance transfer credit card that ensures a lower interest rate on your credit card debt. The next good news is that the federal government has suspended most federal student loan payments until the end of September so you can take this off your to-do list for a bit. Sounds good, right?
3. Reevaluate your budget
Our current situation is certainly not normal. No one is sure what will happen next. However, big changes bring new ways of doing things. And you still can have control over your budget. Your financial priority is to ensure that you can cover essential expenses first. Think about where you can save now and what you don’t pay anymore. For instance, if your company has switched to remote work, you don’t need to spend hours commuting to your office and pay gas or a bus ticket anymore.
Observing the prices, if you used to spend $10 on the ticket, now you will have an extra $60 every week. There is always a bright side of a story! Thus, it is advisable to use this extra money wisely. Add it to your emergency fund as you never know how long the crisis will last. When everything goes back to normal, only then you should consider spending a bit more.
4. Contribute to society
Right now, we are all on the same ship. Yes, it is true, some had better financial planning and now have more in their emergency fund. However, now we should show that we are all humans and help each other. If there is a food bank in your city, try to donate groceries and protective equipment. Be part of the global recovery movement by helping local businesses, cafés, and restaurants remain sustainable.
This all may sound overwhelming. It is completely understandable. The effective financial planning takes time and requires expertise and years of experience.
Thus, if you need any help in your financial planning journey don’t hesitate to contact HMHL team of finance experts. We can make this task a piece of cake for you!