Financial management is essential at all times. However, it becomes incredibly crucial in times like these. In times when there is a pandemic at its full strength, gripping the world. The world has started to see some economic repercussions already.
The uncertainty of this crisis has left many people in stress. This undue stress has probably originated from financial problems and the anxiety that follows while making a financial decision. The crisis forces us to ask the question, "How can you manage and budget your finances to stay mentally and economically strong during these times?"
The following are some suggestions to consider when handling expenses and taking important financial decisions during the COVID 19 Crisis.
Study the different changes in expenses.
This whole pandemic episode, unfortunately, might have brought changes to one's life, be it at home or the workplace. Take into account the new financial situation. Do some analysis on it and figure out the advantages and disadvantages of the new scenario. Doing a SWOT Analysis or using the Eisenhower matrix to make sound, logical and intelligent decisions is suggested.
Following are two aspects which one should always consider while taking critical financial decisions.
What expenses have decreased?
Take a look at essential expenditure and try to observe if there are any changes now. E.g., before the crisis, the money spent on important and vital items might have touched around 50% of the salary/allowance. Now, owing to these conditions, the expenses might reduce down by around 10%. Try to capitalise on this saved expense and save this money for future investments or to buy the upcoming PS5!
Some other expenses like going out for dinners, movies, or drives, are also very likely to decrease. Therefore, given the necessary restrictions imposed, generating significant savings here is very much possible.
Where to invest more?
Living in a fast-paced society, all of us must keep up and invest in things which are going to dictate how the new normal is going to be. e.g., a new laptop, more/faster internet connection, gaming apps, online meeting platforms or maybe a treadmill to work out at home!
The only necessary step is here is to ensure that the distinction between what is essential and what is not is made.
Also, know how to differentiate between what is an item which the employer should cover and what is not. E.g., If you are using a platform to attend work meetings online, make sure that your employer is paying for the subscription.
Also, as governments try to reduce the economic burden on citizens, stay in touch with the latest policies and changing rules. Try reaching out to see what support your local and central governments are willing to offer and try to capitalise on that.
Improve your skills.
Make an elaborate list of the things that might cause hindrance to your financial growth and start trying to cross those bridges by starting with the ones which might cause the maximum disruption. This can be achieved by improving your knowledge, perfecting an already learnt technique or even learning a new skill to handle better/manage a task.
Diversify your income.
Given the current scenario, depending on a single source of income can be a humongous threat to your financial situation. Especially if the crisis is causing disruptions to your workplace which is further preventing you from giving your best. When you are building new skills and expanding your knowledge, give a good hard thought about how you can use these newly acquired skills to initiate a 'side hustle'. Try to leverage your skills and monetise them, thereby diversifying your income sources.
There is probably no going back to normal even after this pandemic ends. This is primarily because the basic definition of 'normal' is going to change. Utilising this time to ponder upon how to prepare yourself financially for what lies ahead is probably the need of the hour when it comes to making financial decisions which are logical, extensive and solves a lot of your expense management and decision making problems.
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