As the global health crisis continues to sweep across the nation, there are money lessons you can pick up along the way. It is true that this is a health crisis and that scientists and the medical field should be at the forefront. They are doing their best to make sure that they contain the virus as well as develop the necessary vaccine to fight the virus off.
While they work non-stop to try and flatten the curve of people being infected with the virus, everyone else is asked to stay at home to limit the chances of getting infected. While this is happening, several industries and companies are finding new ways to stay afloat. You need to be doing the same thing with your personal finance.
One thing that can help is having the ability to see the money lessons that this health crisis brings. There have been a lot of financial lessons even before the pandemic began. And now that it is here, there are financial ideas that stand out. Here are some of them worth looking into.
Budget more if you want to spend less
One of the money lessons you will see more now than before is the importance of having a comprehensive household budget. You might have been able to get away without a budget in the past but you will start to feel how crucial it is to have one at present. Trying to stretch limited resources is hard enough and not being able to monitor your finances only makes it worse.
CNN even shares that your budget is one of the most effective tools to keep track of your finances. One look at your budget and you will see where you stand at the moment. It can give you a quick rundown of your finances. This allows you to see the big picture and where you need to make adjustments when you find yourself dealing with a financial problem.
In light of the health crisis and how it affected the economy, you need to have better control over your finances. One way you can do that is to make sure that you are updating your budget with your income and expenses. This allows you to make informed money decisions as you try to navigate through your expenses during this crisis
An emergency fund can keep you debt-free
One of the most important money lessons you will feel during this time is the importance of having a reserve fund. This should have your emergency fund as well as your reserve fund. The main difference between the two is the amount. Your rainy day fund is smaller since it is meant for smaller needs. It also helps preserve your emergency fund and keep it intact for bigger needs.
Some people choose to focus on their emergency fund and that is totally acceptable. One realization you could have with this fund at this time is the fact that it will help keep you debt-free. Without it, you could be forced to charge more on your credit. This could force you to look at massive bills at the end of the month.
You might even be forced to take out high-interest loans you can get your hands on quickly. In times like these, speed is crucial that is why payday loans are an option. Forbes also shares how the CARES Act makes it easier to tap into your 401k with relaxed penalties on an early withdrawal. If you have an emergency fund, you would not be dipping into this fund.
Keep an eye on your investments is one of the money lessons at this time
The health pandemic has tested a lot of industries and various businesses across the country. If you have investments, checking on them is one of the money lessons this crisis has highlighted in the past few weeks. You could have been very passive with your investments in the past few years because there was no need to check on them.
You could be checking your investments just to know if you have made money or if you are on track. Now, the health crisis forces you to be more comprehensive with your approach. As a lot of companies are feeling the economic pinch, you need to understand how to make the necessary adjustments on your investments.
If this is all new for you, it is best to work with an investment professional. They can help you understand the risks better as well as identify potential opportunities. Warren Buffett once said that you need to be fearful when others are greedy but be greedy when everyone else is fearful. This basically explains how you need to constantly keep an eye on your investments and know when to make a move.
Diversify sources of income
If your main source of income is affected, you will start to realize the importance of creating alternative sources of income. This is one of the money lessons you will come to appreciate during this time. As companies try to get a grip on the new normal not only with their operations but the entire business plan, it can have a negative effect on your salary.
As you try to think of ways to augment your income, having other sources of income will surely come in handy. This is one of the strategies that will prove useful now that your main source of income is impacted. An alternative source of income can give you that much-needed shot in the arm at a time like this.
When looking for other income sources, it would help if you can focus on areas that you already love to do. This is usually referred to as income-positive hobbies. It is where you find ways to try and turn your hobbies into income-generating ventures. It can be selling your artworks, offering your expertise online, or even creating content you can share with an audience.
How to stay afloat even with
Once you find yourself struggling with your finances in the middle of this pandemic, there are a few things you can do to help you manage your finances a little better.
Frugal living is one of the money lessons you can use now
To help you save money, taking on a frugal approach with your finances can help you free up some funds in your budget. The way it works is that you try to identify ways to help you live below your budget. You cut down on food expenses by limiting take out and cooking your own meals. This can also help you and your family ensure that you are healthy right and healthy. The idea is to find creative opportunities where you can save money in your budget so you can lower down your expenses at home.
Manage your payments
The best approach at the moment is to reach when trying to manage your payments is to reach out to your lenders and creditors. There are a lot of them who are taking an initiative in helping their customers manage payments better. Some of them are offering extensions on payment due dates. This is a big help especially if you are unable to come up with the money you need. This is also one of the rare times that you can make minimum payments on your obligations. It keeps you current, you stay out of fees and penalties, and you only pay a small percentage of the total amount. This should help you stretch your income to cover more ground.
Involve your family
If you want to weather the financial struggles you are facing, it is a good idea to include your family and ask for their help. It would be close to impossible to try and do this alone. They do not have to take up a big chunk of the burden but every bit helps. They can help keep utilities down by switching off unused equipment at home. Your family can also help you put together a list of the things you can no longer need at home and can sell online. The more involved they are, the more you can survive this crisis.
There are important money lessons that this health crisis is able to highlight which helps you with your finances. You just need to identify them and make the most of them during this pandemic.