I’m sure I’m not the only one feeling the pinch at the moment since the world went into lockdown and everything came screaming to a halt, including my income! I’m sure everybody is aware that the COVID-19 pandemic has taken a toll on everyone’s livelihood in a big way, whether you’ve been furloughed or maybe you’ve even lost your job. People have still to ensure financial stability amidst loss of jobs, salary cuts and drop in business revenue so I thought it would be useful to share some ways in which you can manage your finances in a recession keep yourself from going under despite the corona fuelled dip in the economy.
HOW TO MANAGE YOUR FINANCES IN A RECESSION.
Beware of scams
It’s so unfortunate, that despite a health emergency which has brought the world to its knees, fraudsters and scamsters are trying to take undue advantage of the situation. The Covid-19 situation has made many people susceptible to frauds, especially those individuals whose finances are in a bad way. Be wary of unsolicited emails, phone calls or other messages that request for sensitive information over the phone or by clicking on a link. Many people have fallen victim to these text message scams and have lost their hard earned money.
Develop a frugal mindset
Developing a frugal mindset is important in these testing times and can help you save loads of money. Identify the online portals which give rewards and cashbacks and adopt this money saving tip on a priority basis. If you need clothes and accessories, go for non-branded ones that are cheaper and similar in quality or try thrifting for new items for your home and wardrobe!. Most beauty treatments can also be done at home. Use cost effective light bulbs and take off all electronic appliances from stand-by mode. You will be surprised how these minor adjustments can add up to the savings each month.
Start an investment account
There is a saying that the best time to buy is when everyone wants to sell. The stock market will be extremely volatile and may remain so for a few more seasons. Valuation, during this period, will be at an all time low as most people will try to get rid of their shares due to the overall element of fear. If you have set aside some money, apart from your living expenses, this is the time to invest in a recession. You can easily get some good quality shares that are bound to give you overwhelming returns as soon as things near normal. After all this tough period is not going to last forever. *I am not a financial advisor, please do your own research before investing*
Set aside an emergency fund.
Keeping some cash for any untoward eventuality is always recommended, and in a crisis like situation like Covid-19 it is a massive financial support. If you by any chance get laid off due to the pandemic, then you might have to dip into your savings if there is no money set aside for emergencies. Counting all your EMI’s and other expenses, keep at least six months of expense separate. Again this amount should not be allowed to be left idle in a savings account. Investing in a recession in an instrument which gives more returns, like, a liquid mutual fund, is much better. Remember, these are extreme circumstances where at the end every penny will count.
Avoid high interest debt
If your job is still intact and you are not experiencing a financial crunch situation, count yourself lucky. The one thing which acts as a life saver in such a situation is not having any high interest debt. A credit card or a personal loan can be very harmful to your financial health, in spite of having a regular paycheck in hand. If God forbid you miss out on an installment, imagine how much the interest will pile up. It would take a lifetime to get out of such a debt. Limit the use of your credit card to an amount you can easily pay each month.
Trim and track your expenses
By keeping a budget and sticking to it is a sure fire way of attaining peace of mind and controlling your finances during tough times. This is the moment you need to sit down and scan your portfolio to find the opportunities to trim spending and save money. For instance, consider cutting out the TV channels you don’t need, unsubscribe from the gym or even reduce the WiFi plan. If you think you are likely to be quarantined, stock up groceries with a long shelf life and store extra prescription medicines.
Check for Government benefits
A number of aid programs and stimulus packages have been announced by Governments of countries all over the world. These are primarily to assist people who have job layoffs or are impacted by the pandemic in any other way. It is a good idea to check if you are eligible for any benefit by way of wage grant etc. People running small businesses also are covered by this in the form of tax benefits or deferment of loans etc. to help them overcome the crisis.
HOW DO YOU MANAGE YOUR FINANCES IN A RECESSION?
Financial prudence is vital at all times, but in a crisis like a coronavirus pandemic situation it becomes all the more essential. Just as living in a crisis can get emotional, it can be the same with not having enough money around. So any step, however small, you make in the right direction is worth it. Use these money saving tips to keep your finances in good shape, before it becomes too late. The need of the hour is to adopt a practical approach, practice social distancing and follow Government regulations. I really hope these help, feel free to leave your own below!