These unprecedented times have shown us time and time again that unforeseen circumstances are a new default setting of our lives. With the pandemic still unfolding in front of our eyes and a global mass immunization currently taking place in hopes of stabilizing the economy and buffering the consequences of the coronavirus outbreak, how you manage your money is a crucial matter to consider. As millions of jobs were lost, directly or indirectly due to the pandemic, people are now concerned more than ever, as stability isn’t something that can be expected nor guaranteed these days. We will list 5 suggested ways of surviving during these crazy uncertain times when it is important to manage your money.
Saving
Financial stress is a dominant kind of stress these days, as it can be hard enough to make ends meet in regular times. Recession and unforeseen expenses may pop up all of a sudden, so you need to be prepared for every cataclysmic scenario. Even though it sounds contradictory, saving money can actually be the solution. A natural question immediately arises; how to save money if you can barely make ends meet given the situation? A big budget assessment needs to be done and later a budget revision, which will help you locate potential unneeded expenses that might be cut and pointed to savings instead. Having a savings routine incorporated into your monthly budget is a huge plus, since it provides a safety net that can easily take care of any unexpected costs that might appear. If you save money regularly, over time it can pile up significantly, thanks to the returns. Even though the returns on savings accounts are at a record low, saving money still pays off and makes perfect sense, since it provides a buffer against further emergencies and disruption.
Investing
In order to attain higher returns than savings offer, taking on more risk is inevitable and a must. The stock market might not be a good idea if you’re not an experienced investor, as it fell sharply at the beginning of the outbreak and the terrain still seems quite uncertain. Among the popular stocks though are the companies whose revenue grew over the course of the last year which include online businesses, communication services, e-commerce companies, green technology etc. Some investors are turning to commodities, but also cryptocurrency; the only asset saving investment that actually blossomed multiple times during the last year and that keeps on growing exponentially in 2021. Digital coins are proving to be the future of money, so be sure to consider these as an investing option, but also an opportunity to make money and safely proof your future.
Retirement contributions
A combination of unfavorable circumstances like low interest rates, the stock market fall and widespread dividend cuts made a perfect storm situation for pension plans. If your budget suffered during these last couple of months, you might feel the temptation to cancel your workplace pension plan. And although it can double your money right away, keep in mind that you’re losing your employer contributions and tax relief, so try to keep paying, even though the time for retirement contributions might not be right.
Borrowing
A large number of people manage to survive thanks to loans and borrowed money and if you’re one of them, you are well aware of the payment holidays that can be implemented on mortgages, credit cards and other loans. Temporary relief is evident, but bear in mind that the interest still builds up, so when the payments restart, they can be even higher than before the holiday scheme began. Also, even though using a payment holiday scheme won’t go on your credit records, it might affect your future borrowings. This is due to the fact that lenders need regular affordability checks to make sure you can manage any new borrowing added to the existing loans, once you start catching up after the holiday scheme ends. So, the advice would be to use these holiday schemes as a last resort, but before that, be sure to get some professional advice or talk to your lender about some additional options.
Spending
Now, this may seem as another contradictory thesis of money management and it should be only natural to, at least try to spend less in worrying times, but the economy doesn’t work that way. If consumers don’t spend money, the economy contracts resulting in job losses, falling incomes and further spending cuts. Some purchases might even gain you money and this is due to the government issued discounts, raised stamp duty threshold on home purchases, deals on green homes and discounts for buying electric cars, for example. This is why, if you can afford it, it might be a good idea to spend, so those funds can come back to you.
In conclusion, in the year behind us, survival mode was activated worldwide and we had to learn how to accommodate to the new circumstances in the times of crisis. Managing money can be a tricky thing to accomplish, especially if some of the household income was lost as a consequence of the pandemic. And although some of the listed ways of managing money during a pandemic might be an abstract concept, bear in mind that they might save you the trouble of worrying over future finances. The only thing you need is determination and persistence in order to find ways to go around these issues; and who knows? You might even gain some money in the process.