Living a Financially Fit Life during a Pandemic—3 Tips to Consider
The COVID-19 pandemic continues to affect the world in more ways than one, but one thing is certain—it’s already caused physical and mental distress to countless people. Many have been forced to leave their jobs or shut down their businesses, leaving them on the brink of financial uncertainty. Apart from the fear of contracting the dreaded coronavirus, many are afflicted with the shadow pandemic of finances. For these reasons, many now turn to proper financial planning.
If you’re one of the few still lucky enough to keep a steady stream of income, it may be high time to begin rethinking your budget. Operating on a budget from your pre-pandemic days simply isn’t the best choice, and you’ll need to make adjustments. Doing so allows you enough room to evolve around your changing needs and desires, along with the current situation.
If you have not revisited your budget just yet, now is the time to do so. In light of a slowly healing world, it’s best to always remain prepared for the first. Consider these tips below, so that you can make better financial decisions in the new normal:
Tip #1: Live within your means
While it may seem a rather straightforward process (especially considering the seemingly rewarding results involved), purchasing the newest and shiniest should never be a part of your lifestyle. Spending more than you can afford is a dangerous hobby, one that can be easy to fall into. How, you might ask? Easy—the wonderful plastic devices called credit cards.
By relying on credit to cover your purchases, you end up accumulating debt, and being unable to pay them on time leads to your finances spiraling out of control. Giving in to your wants occasionally is good and rewarding, but doing them frequently can become a costly habit.
Tip #2: Build an emergency fund
If you have not had the chance to build an emergency fund, now serves as the perfect time. These funds must always be in the form of cash or liquid assets and should be readily available whenever necessary. These should not be life insurance plans, nor any properties. You’ll want to have access to them easily, especially in the event of a medical concern, accident, or job loss.
Make sure your emergency fund encompasses at least 6 months; worth of your expenses, which should include the following:
- Rent or mortgage
- Utilities like electricity, water, and internet
- Insurance premiums
- Medical bills
- Other recurring payments
It’s best not to include other expenses such as vacations and luxury purchases. You’ll want your emergency fund to be used as a solid source of money—not a wallet you can dip into whenever you please.
Tip #3: Find ways to better manage your debt
If you have outstanding debts, it’s always in your best interest to repay them as soon as possible. Always prioritize those with the highest interest, such as credit card debts. Next will come to your mortgages, education loans, and even auto loans. Approaching them at a strategy helps ensure that you never fall into the interest trap—which can end up ruining your finances in more ways than one.
Making Better Financial Decisions
Unfortunately, the pandemic is far from over. Even with vaccines rolling out and treatments in the works, expect aftershocks to happen. These events can further flip the world upside down, especially in the realm of economics. It will be best to create a budget that works—and that can only be a sustainable plan if you consciously make sound financial decisions. That said, remember to keep these tips in mind!
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