The ongoing of covid-19 has not just vanished and threatened millions of people across the globe; it has crashed the global economy as well.
The global pandemic has sparked an economic crisis of -4.9% GDP plugging and a blow to around $12 trillion. (IMF)
Moreover, unemployment rates have increased as millions of people have lost their jobs and seen an income cut across major and minor economies around the world.
The pandemic has taken the world to the worst of the financial breakdown in history. However, everything happens for a reason, and we have to take authentic learning out of it for the future. The current one we are going through has come to teach us some crucial financial lessons with the finest chances.
8 Financial Lessons That We Learned During Pandemic
Though time like the one we are currently facing is a great teacher. It is being said;it teaches us many things, including the importance of relationships, health, happiness, environment, peace and money.
Financial preparedness is essential to keep us through any adverse situation effectively. Below are eight lessons that corona virus has taught us regarding finances.
1. Always Have an Adequate Emergency Fund
An ideal contingency plan is incomplete without an emergency fund. As the economy has come to a grinding halt, we all have understood the importance of saving money.
While many people are losing their income, an emergency fund is the best way to make your ends meet. In the absence of regular income, it is better to assure that your emergency cash is worth at least six months of your necessary expenses.
Moreover, you can increase your amount by investing it somewhere smartly with the least risk, obviously, in portions. Thus, it’s not too late, start replenishing your funds.
Practice cost-cutting measures and utilize declining expenses of lockdown for savings. You can go ahead by cutting wasteful spending as well.
2. Don’t Take Loans If You Are Unable To Repay
Loans are considered as both blessing and curse. They provide an opportunity to fulfill your goals of buying a car or a home. Alternatively, they can call out for a financial emergency as well.
It is better to analyze your repay capacity before signing up for a loan that you cannot afford to pay. It can destroy your financial, physical and mental peace more than you can imagine.
Especially when we are going through the tough times of pandemic crisis, the loss of an asset or income can be more challenging for us, despite some governmental relief. However, they are only for the short term.
Therefore, never take a loan if you are unable to repay them.
3. Do Not Rely Only On Single Health Insurance Plan
As I already mentioned above, the economic crisis has already forcing many businesses to reduce their staff, and things are expected to deteriorate more because financial eternity is not going to bounce back soon.
In this devastating situation, employers don’t have any reliable healthcare insurance coverage for their staff. Thus, your healthcare burden can drain out your saving and get you under colossal debt by liquefying investments.
Hence, it is recommended to not to rely on your company and get affordable healthcare insurance for you and your dependents. It will prevent you from being orphan if your company fires you during the pandemic.
4. Prepare Your Will &Nomination Formalities Timely
It is a common practice of people to delay their will preparation and nomination formalities. In case they pass, their families have to struggle to claim for their inheritance for years. Also, it adds to their grief.
The current pandemic gives us the lesson to not to delay will formalities and complete nominations are pertaining to investments, insurance policies and retirement funds timely. As a result, the legal heirs are prevented from unnecessary sufferings.
5. Diversify Investment Portfolio ToAlleviate Risks
As the covid-19 crisis have devastatingly impacted several investment ventures, it is best not to put all your eggs in one basket.
I personally recommend spreading all your assets across a variety of investment classes and degrees of return and risks. Align your investment to your financial goals, liquidity and risk appetite.
Do not chase unrealistic and scam targets of returns. Furthermore, if you are unaware of investment portfolios, it is better to consult a reliable financial advisor or get help from thesis writing service UK to strategize an expanded plan.
6. Untangle Between Needs,Wants& Demands
Cash shortfalls are common during the crisis, and everyone is concerned for financial outlook in the future. You may have to be very smart while making a purchase decision if you really need it?
Our needs are essential as shelter, food, clothes and transportation while wants are discretionary like entertainment and outings. Moreover, demands comprise of luxury.
You may don’t want to compromise on needs, and some also make their wants priority to enjoy life. In contrast,discretionary things lead towards extra spending. Thus, it is better to take care of your spending on the things you need and not much on your wants and demands. Make a priority budget and stick to it.
7. AvoidingThe Lifestyle SneakIs Better
As we just discussed in the above heading, inflating lifestyle was affordable before pandemic hit; however, people are left with scrambling to make ends meet now. Living a peaceful life means to protect yourself from the downfall of the economy.
Thus, to avoid lifestyle inflation, it is better to create a budget and to make sure you stick to it. When you spend less than you earn, you can have a good cushion for savings as well. Moreover, if you get extra income, you can spend it on the things you want. By this, you will have extra money and have additional worth.
8. Accept Help & Help Others
Teach yourself that it is not wrong to ask for assistance in times of need. It is a lesson that is beyond money.
If you are stuck with a plan that specifies a repayment schedule against your needs, it is better to ask for help during the time of crucial need—a good option than to build up a high-interest loan from the bank. If you are lucky enough to keep your earnings steady,save money and thank your cut-off expenses.
On the other hand, the charity has also increased after the outbreak of covid-19, including food banks, healthcare and shelter.
Suppose you have extra money around then help your needy friends, neighbors and senior citizens. Moreover, you can donate blood, sew masks and offer volunteer services as an act of generosity.
Despite the situation of pandemic or no pandemic, saving money for worst times is always an excellent option.
However, the current situation that we are into has taught us some unforgettable lessons among which financial eternity is the most prominent one.
Thus, let’s be wise and learn from our mistakes. It’s not too late yet, if you start saving from today, you will indeed have money in hand for the bad times.
Claudia Jeffrey is working as Sr. Research Analyst & Digital Evangelist at Crowd Writer providing assignment writing service UK. She is an avid reader and loves to write blogs. Claudia is also a social activist and provides volunteer services to some reputable NGOs. You can follow her on social media to stay updated on her activities.