All across the world, we are finding ourselves in very tricky times. COVID-19 has seen many of us confined to our homes, some of us out of work. With extra time on our hands and uncertainty about the future, it has never been more important to think about your finances.
The world is changing, and being able to adapt is vital. How many of us were financially prepared for a situation like this? Whether you still have an income, or you have plenty of savings, looking forward to the future is imperative if we are to support our family and extended family members.
There are lots of ways we can stabilise ourselves and come out of a crisis better than we went into it. Proper financial planning and investments can work for us and give us a healthier financial future.
Those of us, with a robust financial plan, should also consider revising it. We are dealing with a global situation that we haven’t seen in our lifetime; this makes it very hard to know the answers and plan for a reliable outcome.
A good financial planning advisor can help work through several options which will help adapt your current plan or set you off on a new one.
So, how can we manage our money in difficult times like this?
Revisit your budget
One of the most simple steps you can take to create or update a financial plan is to take a look at your budget. If you are doing this for the first time, then take a retrospective look. How much did you spend in the last two years? Is there a pattern in the increase or decrease in your spending? By going through all your expenditure and then looking at your current income, or savings, you can create a budget which suits your needs.
One of the advantages we have in this crisis is that many of the social activities we spend money on have closed down. We are also travelling less. You may find you have more money available each week because of this.
Set yourself a new budget and work out how long you can survive on the money you have available. Is it something you can do long term? Often our anxiety is higher when we procrastinate over issues. By writing them down and seeing the reality, we can control our spending and regain some focus.
Don’t obsess over your investments.
If you have pensions or other investments, you may be panicking if the value is going down. You might even consider pulling your money out or investing in another area.
Most investments are long-term, particularly pensions. Try not to panic. It is usual for the value of investments to fluctuate, and in times of crisis, this can look particularly severe. Before you do anything, speak to an independent financial advisor. Depending on your circumstances, they may give you a number of options.
Investing during an economic crisis can seem like a good idea when prices are low you buy and then sell when they shoot up again, however it is a very high-risk way of investing, and many people have lost money during past recessions doing this.
Your financial advisor may help you work out a potential pathway if you have the available funds and want to pursue this risk, however, make sure you take their advice and respect their knowledge of this sector.
Understanding your debts and loans
If you have lost your income, then it’s important to revisit all the loans you may have. This includes any overdrafts and / or credit cards. You might find you are entitled to a payment holiday. You may also be able to do a balance transfer to ease the level of interest you are paying.
A good financial advisor can help you understand what your options are, however, if you are finding it difficult to make payments or know you may have an issue coming up, always get in touch with your creditor. Reputable companies won’t want you to get into more debt. Most banks offer support to their customers and help them manage their finances. They have some excellent tips and might be able to point you in the directions of organisations that can help.
Working out some financial planning and investment solutions will help guide you through difficult times and give you a strong focus on rebuilding your plans for the future.
Whatever happens, you can find financial security, and you will weather this storm.