According to the Global Financial Stability Report issued by the International Monetary Fund (IMF), the coronavirus pandemic 2020 dramatically impacts the world’s financial system. If the health crisis further intensifies, the financial stability of the household and individual levels will be severely affected.
The reality is that some households have already exhausted their emergency funds with no clear way to build up the fund again because some are yet to find new employment. Moreover, some have borrowed against their life insurance policies and have no idea how to pay for the money owed. Such scenarios threaten the present, more so, the future.
How can people overcome the financial stability threats that the pandemic poses? Below are the answers.
Commit to a monthly financial plan
It is essential more than ever to make a financial plan, especially a monthly plan. You must know what income the household is generating and what expenses it incurs, and when all these take place.
At the beginning of each month, decide how much to allocate for grocery, gas, and other expenses. In this way, you’ll know which expense to eliminate. Next, decide on a percentage to commit to savings. It doesn’t have to be much at this point because you are still recovering.
Nonetheless, the most crucial part of this process is to stick to the financial plan. This is critical in minimizing the threats to the family’s financial stability despite requiring discipline.
Save while limiting expenses continuously
Contribute to your savings account regularly and limit expenses consistently. If you can eliminate an expense, do it. A simple test is that if it falls in the wants category, you don’t have to buy it right away. Better yet, forget about buying it altogether. Instead, dedicate any amount to savings.
Some ways to limit expenses are:
- Limit online shopping
- Minimize food deliveries
- Learn to cook
- Eat together more often
- Cancel subscriptions
- Do simple fixes and repairs
- Ride a bike
- DIY more if possible
- Program the thermostat
- Wash the car
- Conserve water
- Drink more water
- Grow own food
- Walk more often
Other than this, saving regularly trains you to live within your means. It also compels you to spend only the money you’ve already earned and not the money you have yet to make.
Speaking of needs and wants, it pays to know the difference between the two. It boils down to determining what is essential right now because every non-essential is a want. Therefore, it must not be included on your priority list.
Brush up on financial knowledge
Take advantage of the available financial resources and tools. Research them and use those resources that appeal the most to you. For instance, a budget planning app can help you track monthly expenses without losing insights into where your money is going.
When the pandemic hits, various financial programs and products emerge. Study each of those products to see which of them you can partake in. Please don’t fall for financial scams, lots of which also occurred during the pandemic.
When times are uncertain, the last thing you want to worry about is the family’s finances. The pandemic is ongoing, but this should not stop you from strengthening your financial stability. However, even without a pandemic, you should continuously work on this aspect. Look for opportunities to cut down on expenses. The more you limit expenses, the bigger the savings in the long run.
