What COVID-19 pandemic taught us on managing our finances - Kalkine Media

September 19, 2021 12:34 AM AEST | By Aayush
Follow us on Google News:

Highlights

  • Ideally, your emergency fund should be sturdy enough to bankroll at least three months of expenses.
  • To keep your credit score in check, pay your existing debts (if any) on time and try not to skip any instalment as its dents your score.
  • The easiest and simplest way to kick financial distress out of the window is to live within your means.

The COVID-19 pandemic caught the world off guard with its rapid spread and severe health consequences. The world virtually came to a halt, forcing businesses to take a back seat. The devastating economic impact has somewhat been aggressively handled by central banks around the world, pumping the highest level of liquidity into the system ever.

Personal financial tips

Image Source: Copyright © 2021 Kalkine Media

However, despite the government’s seevral relief measures, job losses and salary cuts led to a cash crunch and severely dented the common man’s finance. As the pandemic is still here and even worsening in some countries, it’s important to have a financial foresight. We have listed below five tips to help you to stay ahead of any uncertainty that might threaten your financial well-being.

Related article: 3 Financial tips to get you through coronavirus pandemic

  1. Have an emergency fund

An emergency fund is slightly different from a savings account. Although one can dig into one’s savings for day-to-day needs, the emergency fund must not be depleted for petty expenses. The sole aim of having an emergency fund is to back you up in case of an emergency such as a job loss, or an unforeseen financial burden for any reason.

Emergency fund

Image Source: Copyright © 2021 Kalkine Media

Ideally, your emergency fund should be robust enough to pay off at least three months’ worth of expenses. Also, it should be invested in a liquid asset which can be accessed at any time.

  1. Budget your expenses

Budgeting your daily expenditure could do wonders to your financial health over the long run. With budgeting you could get important insights such as how much surplus cash flow you can create by omitting a few unnecessary expenses or increase your savings by making some bulk purchases on groceries.

What COVID-19 taught us on managing our finances?

Creating a budget may sound like a tedious task, but once you get a hang of it, it becomes easier. Also, when you get to save a few extra bucks every month, it becomes a fun habit.

  1. Keep a good credit score

Credit scores matter a lot when you apply for a loan. In the time of an emergency, a short-term loan could keep you stay afloat while you work your way out of the financial distress. However, without a good credit score, it becomes very difficult to approve a loan especially at a lower interest rate.

Credit score

Image Source: Copyright © 2021 Kalkine Media

To keep your score in check, pay your existing debts (if any) on time and try not to skip any instalment as its dents your score. If required, delay gratification but target your instalments first.

  1. Live within your means

This is probably the most heard financial advice. The easiest and simplest way to kick financial distress out of the window is to live within your means – put simply, one must spend within one’s capacity.

Don’t try to keep up with the Joneses and try not to swipe your credit card every time you go for shopping. Using cash helps to curb expenses, but with credit cards its very easy to splurge on just everything.

  1. Amp up your earning potential

People who faced the most distress during COVID-19 were the ones with only one source of income, most probably a salary from job. The pandemic has taught us it is not as easy to disrupt your online source of income as it is to disrupt a physical business.

Earnings from investment

Image Source: Copyright © 2021 Kalkine Media

In fact, digital businesses have seen a mammoth growth at a time when most of the businesses relying on brick-and-mortar model went bust. In today’s digital age, you could easily self-publish an e-book, start a blog, do affiliate marketing, etc.

Bottom line

With COVID-19 being a murky reminder of life’s uncertainties, the only thing that is certain is that financial distress could anytime come knocking at anyone’s door. However, if one is prepared beforehand with some very simple yet highly effective financial strategies, it is easy to minimise the severe impact, if not completely dodge it.

Read more: Five tips to hack your way through financial freedom


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.



Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK