Coronavirus has forced the governments to impose lockdowns to stop human loss even if it comes at a massive financial cost to their economies. However, the real swap is not between saving lives and saving economy. The actual exchange is between saving lives from COVID-19 and saving lives from an increase in poverty and hunger due to lockdown majorly in poor and most vulnerable.
Coronavirus lockdowns have resulted in shutting down of businesses, trade and travel as well as the restricted movement of people leaving millions of workers pushed into poverty and jobless. While governments in high-income countries have taken up steps to increase fiscal spending to help firms and workers, low-income countries have not been able to do so.
Many employees are witnessing job losses and pay cuts, making it difficult for them to manage their monthly budget. Hence, saving becomes extremely important during the times when income is at risk with either there is no income or there is no end date for the restrictions. There are some tips you can adopt from home to preserve your finances during coronavirus crisis.
- Set up a budget
You must maintain a budget. First step is to list down every income source and then make a detailed record of all expenses that might include, your home loan, insurance and utility payments.
You should then bifurcate things with recurring payments every month like rent etc. from fluctuating items like food, groceries and gas. Keep checking it every week and make necessary changes if you are off-track. You must ensure that all payments are going where needed and there is no overspending. The more you keep checking, the better you can track your financial stability.
- Park your expenses
As coronavirus lockdowns have forced everyone to work from homes, the extra time that use to go in travelling, waking up early and preparing lunch must be utilized wisely. Every person must have monthly expenses of six months parked in an emergency fund for any unforeseen event like coronavirus in future. If you have not maintained any such account, lockdown is the best time to fill up your account with adequate money as non-essential spending is almost zero or at a minimum in the present times.
The money that would have been spent on shopping, travel and binge eating can be effectively utilized in saving during this period.
- Resist the urge to spend and invest
With the emergence of numerous e-commerce applications, people have become used to shop online from clothes to groceries. During the lockdown, you might feel the urge to order online out of boredom, but the delay in delivery of non-essential items teaches a lesson to focus on ordering only essential items.
Unwanted subscriptions like monthly deliverables of a wine box, coffee box or beauty box should be cancelled. At the same time, gym, salon, and sports memberships, if possible, should be put on hold ensuring that no fees are being charged. Only keep the services that are useful and can be done during the quarantine.
You should instead try your hands in investing if you are planning to save for a long-term and have a sufficient cash buffer. Investing in certain stocks can help you in making a good return.
- Do not take up new loans
Job losses and pay cuts can force to take up loans, but it is never advised to generate a new liability at this point. Many companies are offering financial assistance for the people in need, be it for loan payments or credit card balances. Try contacting the respective financial institution to figure out if they are providing any help to defer payments. However, one should be cautious of the interest that might be charged on availing deferred payment facilities.
Banks offer moratorium, a legal authorization for debtors to postpone payment, which can be opted for if you are unable to make payments on existing loans. A moratorium must be chosen in case of a home loan or car loan only and not on credit card bills outstanding or personal loans as they are costly.
- Explore other sources of income and upskill
Many companies are dropping employees on payroll and hiring people on contract or project basis on various assignments. An extra income from alternative sources by taking up part-time assignments can be generated.
Also, this spare time can be utilized in learning new skills. Several online learning platforms are giving free courses during quarantine. Try looking up for these new and relevant courses, related to your line of work, and enhance your resume. These shall help to exploit the additional time available efficiently and effectively.
Hence, quarantine time can be an excellent time to review your spending patterns and figure out where the money should be put for saving or investing that can give you higher returns.
By pursuing some steps mentioned above can help save some money while working from home or staying inside the home during the COVID-19 crisis.