The ongoing pandemic has cost people their lives, health, and jobs. And as a result of this, the financial crisis that it has brought along to the world has made it difficult for the people to make rational choices when it comes to money management. Old retired parents are taking care of their unemployed babies and finances may soon be hitting rock bottom. So, in this article, we have formed a
list of tips and ways that you should follow to Save Money in COVID-19 era.
Pump up your emergency fund
You could be facing an actual emergency such as a job loss or pay cut and have no or less income to pay down your bills. So, this is the time to beef up your emergency fund. Financial experts recommend having at least three to six months’ worth of living expenses in your emergency fund. One way to increase your emergency savings quickly is to repurpose forgone spending. If you are working from home, you can redirect the money you save on the commute, meals, dry cleaning, and so on, towards your emergency fund. Moreover, since you are not indulging in any leisure activities such as movies, concerts, and restaurant meals as a result of quarantine, you can put this money towards your rainy-day fund.
Control your spending habits
If you are feeling insecure about your finances during the ongoing financial crisis, take a closer look at your expenses. Try and spend only on essential expenses and reduce your non-essential expenses to a bare minimum.
Your monthly bills have to be a priority. The rest can wait. Prioritize essential monthly bills like electricity, rent, insurance premiums, EMIs, etc.
Try to buy products in bulk. Look for ways to buy maximum items in minimum price.
Cancel non-essential subscriptions
As a result of staying at home all day, Amazon Prime and Netflix may seem like a necessity. But keep in mind they are luxuries, and if you are not financially secure, you may not be able to afford them. Rather stick to free media platforms like YouTube, read books you already own, and be satisfied with these forms of entertainment. These small steps can ultimately help you save during these difficult times.
Take a loan to avoid immediate difficulties
If you own a business, your cash flow might have been disrupted. But you have to pay your bills. If you are facing income disruptions as a result of no pay or reduced pay, you can consider taking a short-term loan to cover your bills. Although taking a loan may be an easier option right now, consider it as your last resort. You do not want to take on debt when you are not sure whether or not you will be able to repay it, considering your current situation with less or no chances of drastic revival.
Hold on to your current job
If you’ve got a job amidst this COVID-19 crisis, guard it with all your might. The current pandemic had led to wide-scale layoffs, so, companies would throttle hiring to keep their operating costs low. If you are unhappy with your job or your current position, don’t consider switching. Hold on to it for the next few months and then make the switch.
Try to earn extra cash
Come up with ideas where you can earn extra. Consider selling off things you are no longer using, take up freelancing projects, or get a part-time job. The money that you will earn from these activities may be small, but these small amounts can add up to something significant over time.
An insurance cover can help you prevent an upcoming financial crisis. Make sure that you have adequate insurance cover and not just the bare minimum. This applies to all the insurance policies you have or plan to own – health, life, disability, etc.
The COVID-19 crisis has shown the fragile nature of our economy and healthcare system. Note down all the struggles you are going through right now. Is your emergency fund enough? Do you have adequate insurance cover? Are you too much in debt? Is your job stable? Make a meticulous plan to cover these struggles.
It is difficult not to react to the recent stock market crashes, tempting you to sell your stocks. However, history tells us that markets have always recovered over time. If you make the financial mistake of selling your stocks now, you will lose the opportunity to participate in the market recovery. Panic-stricken selling of your stocks may lead to significant capital loss and unfulfilled financial goals.
Don’t go overboard with buying stocks
Many investors jump in to buy stocks when the market crashes. It’s a good move if it’s done in a measured way. Due to the fear of missing out, do not make a financial mistake of investing haphazardly. Look at your financial situation and decide what sorts of risks you can take comfortably. Make sure that you have enough stashed in your emergency corpus before investing big in stocks.
Do not withhold payments without intimating lenders or credit card providers
If you are not able to make your essential payments, you need to reach out to your lenders or providers and ask for help. The lenders may offer you a moratorium, which will allow you to defer your payments for a few months until things get back on track. On the other hand, if you stop making payments without informing the lenders, you will be considered a defaulter, and be left with a nasty mark on your credit report. A drop in your credit score will also make it harder for you to borrow when this crisis ends.