As COVID-19 rages on to this day, a lot of people still feel the threat of the crisis in their income source. Millions of workers get furloughed or laid off by their employers who were also badly hit by the pandemic.
It is during such uncertain times that spending your hard-earned money wisely is necessary, lest you wish to experience filing Chapter 7 bankruptcy or other financial problems. Here are some wise ways to manage your finances during this pandemic:
Follow a budget rule.
A budget rule is simply a guide on how you should spend your money on different expenses. For some, the 5030/20 rule work best for them: they spend 50 percent of their budget on basic necessities such as food and clothing, 30 percent on personal wants like gadgets and travels, and 20 percent on financial goals such as debt payment and monthly savings.
Such a rule is not set in stone, however, as you could tweak it according to your needs but as long as you prioritize the basic necessities or financial goals.
Set aside an emergency fund.
Pandemic or not, you can never go wrong by setting aside a portion of your budget to build up your emergency or contingency fund. You can do this in three ways: first is to open a bank account solely for the purpose of your emergency fund, next is to store hard cash somewhere safe and easily accessible, and third is to do a combination of the first two.
No matter how you wish to do it, just start saving up money so you’ll have a financial fallback once things go south in the future.
Stop all non-essential subscriptions.
If you’re paying hundreds of dollars for gym memberships, Zumba classes, and other non-essential subscriptions (at least for the time being). Right now, these things are considered wants instead of needs. Why? Gym memberships and Zumba classes can be replaced with a DIY home gym and YouTube dance videos.
By foregoing them while the pandemic is still raging, you’ll have enough savings to fund essential things such as education, household utilities, and food.
Sell non-performing assets.
If you’ve been hoarding a lot of valuables that others are buying right now, then you’re essentially missing out on the chance to earn from your non-performing assets. While it could feel good to have those grail sneakers or designer bags that cost thousands of dollars, letting them gather dust in your storage while you scrimp on your essential needs just doesn’t make sense.
So, allocate at least a weekend to sort through your things and find items that you’re not using anyway. Take pictures of them and post them online on selling platforms such as Facebook Marketplace to turn them into hard cash that you can put to good use.
Settle your debts gradually.
Do you still have unpaid credit card debts that are ramping up interest as you read this article? If so, start paying them off monthly, no matter how small the increments maybe.
Debts and loans are financial obligations that you might wish would just go away but won’t. So, instead of foregoing their payments, pay them off gradually. If you do it quite regularly, you’d be surprised one day to find out that you’re actually debt-free at last.
Consider making a small investment.
If you want a portion of your savings to actually earn for you as you sleep, then consider investing a few hundred dollars on the stock market or cryptocurrency such as Bitcoin. For this, you might want to first do some research to know which stocks are doing well in the traditional stock market or if cryptocurrency is still as promising as it was during the early months of the pandemic and well into the last months of 2020.
But before you make any investment, you should first assess your current and near-future financial situation. Is the money you intend to invest in any of these options money you can afford to lose? If you answered yes, then by all means go with your plan. But if not, then it’s reason enough not to push through with it if you don’t want to end up scratching your head thinking of ways how to recoup your losses.
The ongoing COVID-19 pandemic really did force a lot of people to rethink their views on money and even how they actually spend and save. In hindsight, such changes can be viewed positively, since they make people more careful about their spending habits. Just remember these tips each time you let go of your hard-earned money and you’ll be heading towards the right financial direction.