Kool Kanya and Basis brings to you FUNDamental – a series on women and money that will help you slay the finance game in tough times. Basis is a platform that powers financial independence for women through impactful content, supportive communities, and expert advice.
A lot of us have been affected by the current pandemic. With firms managing with a lower workforce, loss of jobs and heavy pay cuts, COVID-19 has left a huge impact on our lives and lifestyles. In such a situation, adapting is the most important thing to do. You need to manage your finances better and ensure that there aren’t expenses you’re taking up that aren’t necessary.
Here are some easy ways to manage your finances during the COVID-19 pandemic:
Ration your essentials
We’ve all talked enough about budgeting and spending on what is ‘essential’ only. The most rational thing to do now is to ration. Most households have the tendency to hoard – spending more in the present thinking it’s cheaper to spend now and consume later.
The smart thing is to buy as much as you need, even in terms of consumables, and not more than you need.
Watch your income and expenditures, and plan your budget accordingly
In a crisis, your plan has the tendency to blow up. While we should not anticipate living this way forever, more than budgeting,
cash flow planning is essential – this means watching your regular sources of income and tracking those regular ‘needed’ expenditures.
Keep your savings safe
Spending on occasions such as parties and events has now come down significantly. This is great news not only for your wealth but also for your health as you distance yourself from unnecessary interaction with your bank account and save.
With the economy easing out, try not to let your wallet ease out as well. Exercise discretion while spending your money.
While the economy might be open, remember that costs are still on the rise and you never know when sudden expenses will arise.
We don’t need to be penny pinchers nor splurgers, there is always a balance that you can find.
Dedicate some amount of money to building your emergency fund
The COVID-19 situation has impacted the personal finances of most middle-income households. With nuclear families living closer to their workplaces, there are costs that you simply cannot avoid. These could be in the form of rent, school fees and internet/power bills.
While we strongly suggest that you keep these costs in mind, also sticking to the statutory amount to be kept aside for your emergency fund and bucketing your expenses can help you keep track of unnecessary costs.
Even journaling can be an effective method for keeping expenses in check.
Now we all know that families lose control of their finances simply because changing lifestyles overnight is not possible. But being prudent about future spending is a habit you can develop.
A sense of control over the tendency to pay as and when things are needed can be achieved by planning your cash flows.
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If you’re a business owner, consider pivoting your business to maintain cash flow
In households whose income was dependent on their business, for instance, you might have seen a slump in business and/or a complete halt in cash in-flows. This being a health crisis means having the required amount of emergency funds (we all know how expensive healthcare can be, especially as you grow older).
Consider pivoting your business for the time being. In case you see that there’s no demand for your current line of business, say, for example, travelling, you can always change things up and move towards providing a service that is currently in demand. This way your business will also pick up and you will be able to keep income and expenses under control.
Managing finances isn’t as tough as it seems.
Health insurance is useful during this time, especially if you’re younger
At this time, sound health insurance can prove to be useful. If you haven’t already, getting one for your immediate family members can prove to be a wise investment over an immediate expense.
Insurance is much cheaper when you are younger, so now is the best time to put that in order as well.
Looking on the brighter side, this might be a time for you to give your finances a break, connect with possible alternative savings options, clear debt, and hope for a better future, which we are sure, is on its way!
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