These are unprecedented times and creating several new and varying emotions.
Here are some pointers to help you manage your money in this difficult time.
1. Make your ESSENTIALS budget. 💰
Truth is, we love financial planning and budgets, complete with scenario analysis and all. Some other folks, it’s like a dentist pulling teeth. However, this is the time to create an Essentials budget to find out how much money you need to live. With this information, you can be armed on your spending on expenses and then know how much money you need coming in.
The key word in this exercise is “essential” which requires you to reduce costs. Likely, with social distancing you are no longer commuting to work, spending less on meals & entertainment and other costs. Eliminate these expenses right away and consider deferring or eliminating further costs, like that gym membership that you are not using.
Remember that a dollar saved is the same as a dollar earned.
2. Your cash is QUEEN! 👑
Once you know how much you need to spend, now attention can be made to how much you need coming in. If you still are employed, now is the time to put away the money you might be saving into that emergency fund (if you haven’t already). An emergency fund should be 3 to 6 months of living expenses - that number you found in step one.
If you have lost your job or are not earning enough due to reduced hours; take advantage of the government emergency programs out there to supplement your income. Next would be to look at other avenues such as savings and investments. Find whatever sources you can use before incurring any debt, if you can.
If you must take on debt, negotiate a lower rate with the bank, credit card company or bank of mom & dad.
3. PAUSE & REFLECT before making major financial decisions. 💸
There is a saying in personal finance that you should wait 24 hours before making major financial decisions. I would say in the case of COVID-19, wait 2-4 weeks. If you don’t have the emergency fund set aside, if you don’t think there is stability in your job, or if you think you might be making some moves post-COVID, now is not the time to make major decisions that were not on your financial plan. Now, cash is Queen (step 2).
There are some exceptions here, especially if you are investing for the long-term. However, we suggest if you see opportunities, it would be wise to discuss with a financial professional before taking action.
Managing your money during uncertain times can be difficult; however, gaining clarity can help alleviate some of that anxiety.
- The Wealthnuvo Team An online wealth management platform for ambitious women.