The rise of the global pandemic COVID-19 has caused economic aftermaths across the globe.
Unnecessary to say, people, are very much stressed regarding their finances because of the COVID-19 outbreak. With so much ambiguity everywhere, it is critical now more than ever to emphasize savings & lower spending.
Check on Your Financial Health:
Needless to say, COVID-19 has affected everyone in one or the other way, but for most individuals/businesses it’s mainly in terms of unforeseen financial circumstances. From the loss of income to fear of unemployment or reduced pay, checking in on your financial status can help you stay better prepared for uncertain times. Take time out to review the following:
These questions may seem stressful but given the current situation, it’s important you plan ahead for the future by understanding where you currently stand. A thorough review can help you understand where you stand and how to get where you need to be in terms of staying secure during these uncertain times.
Revisit Your Budget:
Once you have understood where you stand with your current finances, it’s time to audit your budget. Your routine has changed, you no longer commute to work or spend the usual for coffee on the way to work. Similarly, due to Work from Home (WFH) requirements, you would have noticed a spike in some areas of your expense such as utility bills, etc.
Since the onset of the pandemic, your personal routine would have undergone some changes that wouldn’t have taken place in case of a regular day. This may contribute to changes in your budget with saving and expenses which you otherwise wouldn't have incurred.
Redoing your budget can help you save money for unforeseen emergencies.
Consider the following while auditing your budget:
Consider cutting expenses by reviewing your payments towards subscription, mortgage, contacts and loans you have purchased in the past and see if it can be terminated, deferred or put on hold. On the contrary, you may need to increase your grocery budget to accommodate the new routine.
Are You Eligible for Government Relief plans?
Globally, countries are trying their best to empathize with businesses and individuals facing the financial heat caused by the Pandemic. This could mean you or your business would be eligible for a government relief fund which would prove to be beneficial if you are looking for additional financial support without having to stress about it. Ask your financial planner for more information for any such plans that you think you are eligible for.
If You Haven’t Already, now is the time to consider a Savings Fund:
An emergency is capricious & tough to deal with. Stick to the old saying of “saving as much as possible”. Plan your budget and steer clear of expenditures that you can.
We can’t control every aspect of our life or the current situation, but it always helps to know in case of an emergency you would be able to navigate it with funds that you had saved up in the past. If you haven’t already started a savings fund, now is a good time. In terms of current COVID-19 context, keep cash handy and focus on staying liquid.
As mentioned above a detailed budget audit and review will allow you to understand your financial standing. These extra savings can be put into a separate fund which you could consider for a rainy day.
In case you already have a savings fund, consider topping it off with a bit more. In a typical case a financial advisor would suggest saving for months of expenses but due to the special circumstances consider the possibility of extending it to 6 months to a year.
Inconclusion, every individual, small and large company has been affected in many ways due to the Pandemic. It has been such a sudden change that no person or entity could brace itself or stay fully prepared for the large-scale impact it has had in the last few months.
With uncertainties around us, the best way to cope with it is to stay prepared as per our best capabilities.
For financial planning-related matters, feel free to reach-out to Sunil Chugh in Mississauga. Sunil Chugh, a Financial Planner would love to help you manage your finances in the most productive way so that you can handle any financial dilemmas during and after the COVID-19.
Disclaimer: The information in this commentary is for informational purposes only and not meant to be personalized investment advice. Please contact your investment professional for investment advice and before investing in any product. ACPI does not publish market research and Sunil Chugh is not registered as a research analyst. The content is from sources believed to be accurate and the opinions expressed are those of the author and do not necessarily represent those of ACPI