5 Financial Recommendations For A Better Economic Stability In Crisis | Divya Toshniwal |
"The Coronavirus pandemic has brought the whole world to a halt. Entire countries are locked and the number of cases is continually rising. Due to lockdowns, all economic activities have almost come to a standstill. Many have lost their jobs and many are working with a salary cut. In short, the vast majority of people are suffering from a financial crisis."
Even when things have opened up now, situations are not as under control as they used to be. People have still been suffering economic issues and searching for a good job and earning more. So how do we handle money in times of crisis?
To maintain your economic stability in times of crisis keep in mind the following points:
1. Build An Emergency Fund: By now each one of us has understood that life does not always go as planned. Situations can always take a turn for the worst and in such situations, the worst is the position when we go through a financial crisis along with the external position. This is not only for this pandemic but a lesson forever that each one of us should have an emergency fund account with at least an amount equal to your monthly expenses multiplied by 3. This fund should be your first priority and every investment that you plan should be done after you have had this amount kept aside as your emergency fund.
Read: Pay Yourself First
2. Controlling Your Expenses: In these times of crisis not only should one focus on saving money but also the resources. In these times one should concentrate only on what is necessary and avoid luxuries for the coming couple of years. The definition of luxury and necessity varies a lot from person to person and thus I would not get into that controversy. The aim is to survive in as little as you can. Bring the concept of Minimalism into your life and control your expenses to make up for the loss incurred in this pandemic.
3. Invest Only Where Funds Can Be Liquidated Easily: We have no clue what directions our life or the economy is going to take next and hence we should be prepared for the worst situations. Though the Stock market looks really lucrative today, it is highly volatile and too risky to get into. Right now the concentration should be on a safe investment. The concern is not only because the Stock Market may go further down but also because you may need funds at any point of time and in that case, it is better to invest in funds that can be liquidated easily with the least loss. At least some portion of your investments should be in such funds. Don't keep all your eggs in one basket.
4. Credit Card Usage: A lot of us hold credit cards with good limits. We may be thinking that currently due to cash shortage we would use a credit card and then pay later. This is the biggest mistake you are going to make. Credit cards charge high-interest rates on delayed payments that can pile up a huge amount of debt for you and when you move out of this pandemic, new trouble would be waiting for you. My suggestion is to use your credit card only to that extent when you can pay the spent amount before the due date or else don't use them at all. Try and limit your expenses only to the disposable income you have.
5. Increase The Sources Of Your Earnings: In times of an economic crisis, it is a mistake to depend on only one source of income. Other than that one major source of income try creating a few smaller sources of income that can hold you in cases of salary cuts or temporary lay-offs. Having more than one source of income can ensure you would have a continuous cash flow.
2. Controlling Your Expenses: In these times of crisis not only should one focus on saving money but also the resources. In these times one should concentrate only on what is necessary and avoid luxuries for the coming couple of years. The definition of luxury and necessity varies a lot from person to person and thus I would not get into that controversy. The aim is to survive in as little as you can. Bring the concept of Minimalism into your life and control your expenses to make up for the loss incurred in this pandemic.
3. Invest Only Where Funds Can Be Liquidated Easily: We have no clue what directions our life or the economy is going to take next and hence we should be prepared for the worst situations. Though the Stock market looks really lucrative today, it is highly volatile and too risky to get into. Right now the concentration should be on a safe investment. The concern is not only because the Stock Market may go further down but also because you may need funds at any point of time and in that case, it is better to invest in funds that can be liquidated easily with the least loss. At least some portion of your investments should be in such funds. Don't keep all your eggs in one basket.
4. Credit Card Usage: A lot of us hold credit cards with good limits. We may be thinking that currently due to cash shortage we would use a credit card and then pay later. This is the biggest mistake you are going to make. Credit cards charge high-interest rates on delayed payments that can pile up a huge amount of debt for you and when you move out of this pandemic, new trouble would be waiting for you. My suggestion is to use your credit card only to that extent when you can pay the spent amount before the due date or else don't use them at all. Try and limit your expenses only to the disposable income you have.
5. Increase The Sources Of Your Earnings: In times of an economic crisis, it is a mistake to depend on only one source of income. Other than that one major source of income try creating a few smaller sources of income that can hold you in cases of salary cuts or temporary lay-offs. Having more than one source of income can ensure you would have a continuous cash flow.
Read Also: 6 Easy Ways To Earn A Passive Income
We should keep in mind all these above-given points not only for this pandemic but also for the rest of our lives.
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