Financial worries of people have undoubtedly increased during these uncertain times. With the fears of Covid-19, and the resulting lockdown which in turn has adversely affected jobs and businesses, financial worries have understandably increased. During such an unprecedented time, it is essential to assess the current financial situation. It is equally important to gauge the long term direction and effect of the current situation on our personal finance.
Here are some common areas which are a concern for many people.
Late or missed payments: Late payments, unfortunately, is a problem for many. People fear about the huge interest which accrues if they are not able to pay on time. But all you need to do is simplify your financial actions and responsibilities. To avoid late payment penalties, you can choose the auto-pay method for EMIs. In case you don’t have enough money in your account to pay the EMI, call your bank or moneylender to renegotiate the payment terms and to increase the loan term.
Need vs. Want: When any crisis hits, economic or whatever, people face a conflict between needs, wants and luxuries. Have you heard that the global luxury market has fallen drastically during this pandemic? Furthermore, people are forced to think about only those things which they actually need, and not the ones they want. If you are facing a dilemma, thing about things which you can’t do without. Do you still need unused memberships and luxury items, or are basic things like food more important? Maintain a strict budget and use a good expense tracer app.
Increase in debt: During any crisis, expenses, and therefore debts tend to increase. These take the shape of home loans, credit card debts, auto loan debts, student loans and more. These have huge interest, and as time goes on, you accrue a high interest rate. This makes it tougher to pay the loan off, which makes the situation worse. For debt recovery, institutions can legally take actions, which people certainly do not want to face.
Lack of emergency funds: It is most prudent to say that one should have an emergency fund in place for crises like this. But it also depends on your financial obligations and budgeting skills. It also depends on your current debts, and how fast you can eliminate them.
Cash flow problems: One of the biggest challenges for people right now is outstanding payments. The online course you took? You now need to pay the next month’s fees. What about the bike you bought just before the lockdown? You still need to pay its EMIs. These create cash flow shortages, which in turn result in monthly budget failures. It is a big concern when there’s not a steady paycheck. The impact of financial problems can be many, and can lead to physical and mental issues. Worrying about these won’t help, but having a strong financial plan to manage these challenges can.
Here are a few ways you can address your financial concerns during this crisis.
Overhaul your income and expenses
Prioritize your financial goals
Do not make split-second decisions or speculate
Minimize extra financial obligations like debt
Stay positive and realistic
It’ll be lying to say that there is no problem. There are many problems, challenges and certainly fears right now. However, such times also bring opportunities. For instance, you can use this time to focus on your financial growth, and to make your financial portfolio lean and mean. This will take long, but everything is possible with patience and positive outlook.