Secure Your Finances During the COVID-19 Pandemic
The coronavirus pandemic has bankrupt many businesses but it also gave a chance to many startups. When it comes to finances people might think the best thing to do is to save it at a bank but you’ll be surprised. If you spend some time following the news recently, you’re likely to see stock prices plummeting or economic performance declining.
This article does not concentrate on trying to predict when the next recession will happen. What it will do is help you make sure you’re ready when it happens. Here are some of the top things you can do to make sure that your financing is in good shape if the economy goes down.
Save 3 to 6 Months of Living Expenses
This is a no brainer, saving is crucial for many reasons. If you’re concerned about an uncertain market, one of the smartest strategies you should do is making sure you have 3 to 6 months of living expenses in your savings. The reason it’s necessary to have this spare money available is that in the case of an emergency, you do not want to realize that you don’t have sufficient funds to cover your food, your house, medication, or other bills.
Without a house or a place to stay, everything else quickly falls apart. You wouldn’t want to be in a situation you’ve got to go into debt to get through, so setting funds aside for an urgent situation is the best alternative.
Family Comes First
Money comes and goes but family will never be replaceable. If you have children, a partner, or other family members who depend on your current and potential earnings, you need to guarantee that you have sufficient injury and life insurance. When you have group medical insurance from your company, make sure your compensation is sufficient. Oftentimes you’ll find out it’s not.
To make matters worse, if you have group disability insurance, you can lose compensation should you lose your work. That is something that is far too common during an economic struggle.
The same issue extends to life insurance that you have set up with your job. Whenever it comes to purchasing individual life insurance, term life insurance is possibly the safest bet. (If your kids are young, consider a 20-year term policy.)
You can easily compare the prices over the internet. Another justification for having term life insurance right now is that you might not be as healthy in the future; it can save you a huge amount of money because you’ve locked in cheaper premiums right now while you’re in great health.
Reduce Expenses
Don’t spend so much money on unnecessary things, save your money on things that really matter. We live in a time where getting a decent phone contract, strong WiFi, and loads of stuff to stream on TV is a virtual certainty. However, it doesn’t necessarily mean that you are supposed to pay a higher price for it.
We all need a cellphone, so choose an affordable plan. If you spend more than $50 per individual for a cell phone service, suggest going to a low-cost wireless provider like Mint Mobile or Cricket Wireless. One of the most valuable things you can do when you are on your own is to live with a roommate to aid you in covering certain expenses.
You might save all your money on food and energy, but if your rent is too expensive, you will start to struggle fast. Don’t rent the most expensive apartment because is nice.
Find Different Ways to Make Money
Saving money is key but making the money to save is as important. If you’re still concerned about the difficult economic times ahead, then you need to do whatever you can to secure yourself. The best way to achieve this is by growing your expected income. Whether you’re going to spend some time researching money management forums or financial planning posts, you will find that there’s a buzz surrounding starting up a side gig.
But it’s important to not forget your most significant income stream: your current job. If you can spend a little extra time and work hard towards a promotion, this may be a more productive way to boost your income.
Credit is Crucial
Credit is one of those things that help us get the new car or the house of our dreams. It might seem dumb to care about your credit score when you’re concerned about the economy. But what happens if you’re ready to purchase your first house during a recession?
It may be the best opportunity to purchase if rates go down, so having a loan during a crisis is more difficult, according to the Local Records Office. Do you know what lenders do in a recession? They only lend to the most dependable borrowers. This suggests that if you don’t have outstanding credit, you could be in some trouble. The same holds true once you are ready to refinance your student loans at reduced rates.
Remember to review your credit report on a regular basis for incorrect facts, so that an inaccurate record or fake account will not ruin your reputation.
Lower Down High-Interest Debt
Stop putting yourself in debt and pay down high-interest debt. Paying down your high-interest loans is important as it takes the strain off your cash flows while you’re in financial difficulty.
Not seeing a big credit card charge every month would help you live above the water until things are resolved. When you’re not paying off your loans because you’re just struggling to afford the minimum payments for your credit cards, the balances will go up fast.
Imagine getting laid off at work and watching your debt rise in front of your eyes. By paying off the highest interest loans, you free yourself from struggling in the future.
Invest
Invest as much as possible. When the stock market is crashing and everybody is getting anxious, it might sound counterintuitive to keep investing. But you have to remember that it’s virtually impossible to predict the market efficiently. This ensures that to give your investment the highest likelihood of success, you need to continue investing on a regular basis.
A simple way to achieve this is to automate it. You can do this by making a recurring transfer to your IRA account or brokerage account. There are also apps that help make it easier to set these kinds of transfers up. Make sure you continue to invest in such a way that you are ready for success when recovery takes place.