Pandemic happens at least every 100 years. Who would have thought that our generation will experience it at hand. It crippled the world economy and made countries on the brink of bankruptcy.
There are lots of lessons to be learned on a personal basis. Here are 7 lessons you can relate.
1. Have at least 1 year of Emergency Fund
Always save for the rainy days. One thing that this pandemic teaches us is the value of having emergency fund. It’s a money you can use or access easily in the event of uncertainty. We usually use bank to store all these extra money for safekeeping and small return if possible. Return is irrelevant as our main goal for this is not to grow it, but just to keep it and make it readily accessible to us in times of need. The pandemic devastated a lot of businesses, especially those small ones. It resulted to millions of people now found themselves unemployed and no other source of income. What’s worst is that the pandemic can last more than a year. Without emergency fund, this can lead to stress in our finances. For those with small amount of savings, this pandemic teaches them to save more for the rainy days.
2. Have a Passive or other source of Income
With our main source of income threatened by the pandemic, it’s good to have backup plan or plan B. If something happened to our employment, having a secondary source of income helps a lot. Whether it’s a passive income or another sideline job. Both will help to shoulder the monthly expenses that we need. Relying income mainly from employment is not a good idea anymore. It works during normal days, but not in pandemic. You need to be smart and fast to adapt. Look for other opportunities that can give you another income to help tide the effect of this current pandemic. There are lots of stories where people with secured jobs before ventured into another business even when they have little or no knowledge at all just to survive. You have to manage your pride just to survive. If you have family relying on you, for sure you will do everything for them.
3. Lessen Debt
Imagine being unemployed and still have debt or mortgage to pay. It’s a disaster that you can only avoid by living debt free. However, debt may be impossible to avoid. There are good and bad debts. To minimize your risk, try to lessen your debt so you only have to pay the minimal amount. Take good care of your credit card and avoid accumulating lots of bad debt.
4. Control Spending to Minimal Level
Be careful to over spend during this period of financial difficulties. Learn to tighten your belt and spend only on the things that you really need from day to day. Don’t spend like there is no tomorrow. Wait until everything goes back to normal and you have a secured job again. No one knows what might happen in the future if this pandemic persists beyond expected timeline. Be ready and prepare for the worst scenario.
5. Learn to Budget
There is no better way to manage your finances without budgeting skills. Learn to track where your money is. List down your income and expenses. This is the only way you can be sure to use your money the best possible way. Having a good budget will help you tide the pandemic. It’s a useful life skills that everyone should have and applied in our daily lives.
6. Defer all Unnecessary Expenses
Cancel your trip. Don’t buy new gadgets. Defer buying new set of clothes. These are things that you can delay for now while you are still worrying about your income. You can still live comfortably without these wants in your possession. What matters most is that you save as much as you can to help with your current finances. This pandemic brings a lot of uncertainties and now one knows when our life will be back to normal. For the mean time, just live below your means if possible.
7. Diversify your Investment portfolio
Investing in a diversified portfolio helps. For example, if you only have rental properties on your current investment, this pandemic will surely affect your source of income. As business going bust and tourists not coming, you may find your rental properties vacant for a couple of months or years. Added to that is the local lockdown which really hampers that movement of people. Real estate is just one asset you can invest your money. There are other financial instruments like stocks, bonds, mutual funds, bank products and other similar instruments available in the market. They will have their specific effect pandemic effect, but each of them also have various return and ability to cope with the current trend. Some may take time to recover, while some may go back to normal rate really fast. Diversification allows your eggs to be put in several basket. So that when 1 basket go bust, you still have other basket to rely on.