This is a period of uncertainties and possible financial crisis as the outbreak of the Coronavirus is affecting productivity, efficiency and income level of organisations. Productivity and commerce have dropped as a result of the government shutdown of the country to stay the spread of the Corvid 19 virus.
The implications of these could vary from a reduction in working hours to reduction of salaries, late payment of salaries or mass retrenchment of staff (worst case scenario) – I hope it doesn’t get to this. However, there is a need to better manage finances as some of us might now live on emergency funds or savings – I bet you want to be smart about how you spend such funds.
Here are some tips on how to manage your finances this period:
- Evaluate your spending
A change in income requires a change in spending. You need to eliminate expenses that are less important, now is the best time to analyze your spendings and make some adjustments. Make a list of everything you currently pay for, as you go through the list, ask yourself a question and be honest, can I do without this for now? If your answer is yes then cross out. This is how you determine your “bottom-line” expense or before you spend think of Terry Crews in “Everybody Hates Chris (Last Last na Ijebu go win).
- Prioritize your remaining expenses
After crossing out the less important, prioritize your needs. This could mean backing off on non-essential expenses, like online shopping, subscriptions, and memberships (Chai that alert of subscription can pain when person no get money), eliminating these expenses aren’t permanent but to help you free up much-needed cash this recessionary time. Feeding, housing and paying essential bills (such as electricity, water, and medicals) are top priorities. You can’t afford to be out on any essentials and while stocking up your food supplies, avoid overbuying as that will stress your food budget.
- Build your emergency savings
It is important to have emergency funds set aside to weather unexpected expenses to avoid falling in debt if you have a disruption in income. You might want to consider putting monthly savings and retirement savings on hold and channel these funds to your emergency savings. I know financial advisors encourage setting aside a small portion of our income for the future, ideally 10%-15%, but you might want to scale back on that and put such funds into an account for emergencies. Remember, this will be a short-term change, you start savings once everything is back to normal.
- Make wise decisions
The recent ups and downs have made lots of people uneasy and in panic. There has been panic buying, breaking of investment, even borrowing at the mention of the lock-down and social distancing. But you need to keep calm, breathe and think, so you don’t make irrational decisions out of panic and disorder. Avoid the temptation to dip into your fixed savings and retirement savings to get by during these uncertain financial times, which is why I suggested a pause in savings earlier.
Since we are encouraged to keep a social distance – less outing, which is usually where we spend money, use that to your advantage to help cut back your budget to the essentials.
We will continue to publish content that will help you live through this period – we are in this together! And for emergency loans, remember that we are always on standby to give you fair loans.
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Kindly submit a comment if you find our tips helpful.
Keep staying safe and healthy!