Although COVID-19 has shaken the whole world with its awful impact on human life and economies, it has inherently awakened many people to learn how to be financially strong. Most of us are now alert to make more savings and spending only when required.
Due to job insecurity or job termination, financial anxiety or instability makes it tough to make judicious decisions when it comes to managing with whatever money is there with us. To keep its impact at bay, here are the dos to consider in the time of crisis:
Terminate Less-important Digital Memberships
Lockdown imposed due to the pandemic and the recession stress may tempt or push you towards different entertainment subscriptions such as HBO Max, Netflix, Disney Plus and Amazon Prime. However, when the income goes down or when in ‘no-job’ situation, these subscriptions are extra items or frills.
Thus, to save more during tough times, you should consider terminating such subscriptions. Wisely, you can choose a free online platform such as YouTube and Kindle, and stick to the standard digital TV subscription.
Look for More Earning Opportunities
Whether you have a job or not, this is an essential action to take. While a pandemic or a recession can bring economies to a standstill, it is not a permanent impact.
So, be wise to keep anxiety at bay and look for small opportunities to earn extra. For example, you can consider making and selling food, selling your things that are no longer needed, or some freelancing work of your caliber. You may earn less from such opportunities but the amount you get can give you good earnings over time.
Inform Creditors about Your Plan for Payments
One of the biggest mistakes people do in tough times is to stop making payments or installments without informing the creditors. This behavior naturally triggers suspicion in their minds of being a cheater.
If you know that you cannot make payments on time, inform the lenders about the same and seek guidance. The lenders may provide a suspension offer due to which you can make your payments later after some days or months or until everything is back to normal.
Increase Your Emergency Fund
Loss of job or reduction in work pay triggers a situation of emergency, as you then may not have sufficient income to pay your bills or dues. This is when you need to consider adding to your emergency fund. Most experts suggest having an emergency fund that can help you for three to six months.
A simple way to boost this fund is to add waived or declined expenditures. For example, if you have become a freelancer, you can add the money saved on traveling, outside meals and purchase of new formals to the fund.
Hold Your Stocks
It is a common habit to respond to the stock market volatilities by selling the held stocks. Well, this is not the right way to react. This is because history has many tales revealing how markets have recovered after a recession or any other tough time.
Panic-oriented sales are likely to give you capital loss. So, do not sell your stocks during the recession to gain more cash. If you do, you are at loss, as then you will no longer have a chance to earn more during the recovery phase.
Stop Buying More Stocks
Another common trait seen during recession is investing in an increasing number of stocks due to low prices induced by a market crash. Investing in stocks in such a time is good but only if it is done by considering the financial position, the ability to bear risks and without the fear of missing a chance.
The period of financial crisis marks the time to make sound as well as smart decisions for securing finances for the future. The aforementioned dos will certainly help!