Chances are, the COVID-19 pandemic has upped your worries about your personal finances.
While taking care of your health remains paramount, you also need to take extra care in managing your finances. With that in mind, here are four steps you can take to stay financially sound during these times.
Establish a stable emergency fund
When something unexpected happens, your emergency fund will be able to cover for you. But, how much should you be saving in the first place?
At a minimum, you should have at least three months’ worth of living expenses in your emergency fund. This means if you spend an average of £3,000 monthly to cover your basic needs like your food, utilities, gas, mortgage or rent, you’ll need at least £9,000 in your emergency fund.
When you have sufficient emergency funds, you’ll have enough buffer for any health or other family emergencies.
Maintain your credit
After the outbreak, the government, as well as many financial lenders and banks, have temporarily modified their lending schemes. These changes can impact your credit, so it’s become more important to maintain and manage your credit.
If money is tight, take advantage of the financial resources and alternative payment options organisations are currently providing to help people through the crisis. These include alternative utility payments, increased credit limits and expanded unemployment benefits.
This way, you don’t run up your credit usage, miss payments or make late payments. These can negatively impact your credit score.
Stay in touch with your financial coaches
Whether it’s your trusted financial advisor or your long-time trust management lawyer, it always helps to constantly communicate with them.
Market downturns often lead to irrational decisions that could have long-term effects on your finances. Before withdrawing or investing a huge amount of money, it pays to talk to the experts first.
Focus on your budget
When you’re facing extended downtime with reduced or no pay, creating a budget can help you ease the feelings of anxiety and stress.
Consider the following as you come up with a budget:
- Housing costs (rent, mortgage) are usually one of the biggest budget strains. The consequences of falling behind on payments can be major and longlasting so you must prioritise settling your monthly housing costs first. If you’re unable to make a full payment, contact your landlord or lender, and state why you’re unable to do so. Look if they can defer your payments while the pandemic persists.
- Buy only the essentials when you’re shopping for groceries and other household items. “Luxuries” should be a lower priority and should only be bought if you have extra money.
- Reconsider your monthly subscriptions like your movie streaming service and gym membership. Are you still getting your money’s worth? If not, maybe it’s time to cancel and allocate the money on more important things. Besides, there are tons of free online streaming sites and fitness apps you can use.
If you’re still not taking a proactive approach in sorting your finances, now’s the time to do so. Well-structured finances will let you stay financially afloat and minimise any financial anxiety.