MANAGING YOUR FINANCES DURING COVID-19

A common New Year resolution is to become more fiscally responsible. But how do you do that when a global health pandemic hits in the first months of the year?

Covid-19 (or the coronavirus) has put social and professional lives largely on hold (more on that in this recently posted article). This uncertainty seems daunting, but we’ll outline some things you can do to help keep your finances in order.

First, don’t panic

With all of this self-quarantining and home isolating, the mind can wander. When it comes to investing, you may enter a fight-or-flight mode with your investments. It may seem attractive to start selling as we head towards a recession. Avoid monitoring the daily changes in the market and don’t let emotions control decision making, your sanity will thank you. People will take a beating for the next few months, maybe even years, but it’s not the end of the economy as we know it. No, it’s not looking great, but markets will naturally bounce back. Stay rational, and only sell for sound reasons, after all, there is no shame in padding your emergency funds if necessary.

On the flip side, properly manage your expectations and your desire to capitalise. The markets may be in a slump, which means cheaper entrances into investment opportunities, but remember that risk isn’t something many of us should be considering right now - especially if you cannot afford to take on a loss. If your income cannot support this, resist the temptation to hurriedly buy into anything for now, or you could end up being worse off.

PHOTO BY THOUGHT CATALOG ON UNSPLASH

What’s your plan?

For a practical outlook on things, ask yourself how your money is being managed right now. Is it being spent on living necessities? Some of us might be in this for the long haul, so shop with the mindset of what is essential.

And what about bills? Is there a game plan for how to pay them in the coming months if things stay shut down? If income has been completely lost, see where money can be saved. Lose monthly services that aren’t vital to quarantining - we clearly understand keeping Netflix and Spotify - but maybe you can consider switching to lower cost utilities providers, even if temporary. During times like these, creditors are also more flexible with late or deferred payments. Contact them and explain your situation, they will be responsive in helping out where they can. Also, monitor government programs. Many countries in the EU are going above and beyond for relief. For example, Germany has made it impossible for landlords to evict tenants for late payments due to the coronavirus pandemic. Spain also announced a suspension of mortgage payments and utility bills for those directly affected.

Can you lean on any emergency savings? It’s economic events like these which make people realise the importance of savings. For those lacking in the area, now is a great time to start structuring a pot of emergency funds. The reduced spending may leave some room to start adding to those savings. And hey, with more restaurants, bars, and shops closed down, it might be a bit easier to hold onto your cash. For those with pensions, refrain from withdrawing. They will take a hit, but they will rebound, so try and stay patient.

Things you can do

When asked about what investors can do, our co-founder, Arnab Naskar, says it may also be a good time to invest in capital.

“Use this downtime for sharpening your capital investment skills. There are opportunities floating around, however, it’s up to you to find the ones that you want to tap into and invest. Also, capital is not only about your money but also your personal skills. Use this isolation period to acquire new skills.” - Arnab Naskar, Co-Founder, Business Strategy (Lead), STOKR.

Now might also be a good time to update those LinkedIn profiles or résumés. Reaching out and connecting with people is important for letting people know what you’re doing and keeping doors open for job opportunities if the job market weakens any more.

And don’t forget about the opportunity to freelance! Can you speak another language? Are you a good writer? Do you have skills in web design or graphic design? Even during down times like this, there are always people looking to hire freelance work in these areas and more. Check out sites like Stepstone, Upwork or Fiverr to see what people are looking for - your talent might come in handy.

Wrapping up

Be smart and prudent with your investments. Refrain from panic buying or selling as that does no good. Instead, sharpen your skills by learning how to find the right markets and stocks, they are out there, even during a down economy. Now, more than ever, how you spend will be absolutely crucial in the coming months. Be sensible in what you need to live on and see what other help exists. Creditors, governments, and service providers are all doing what they can to help, so see what you can do to make the most of it. Lastly, try a side hustle! Any extra skill you have, there is likely someone out there that will need it. Look into what you can do for freelance cash.

Takeaways

• Don’t panic. Focus on your health, and make sensible decisions on your purchases in the coming months.
• Invest in capital, but be smart about it. There is a lot of opportunity out there right now, but sharper investment skills could help you in the long run.
• Have a plan. Strategise bills, look into relief programs and try to start building up your savings if you don’t have an emergency fund.
• Rent out your skills to those who may need them. Freelancing is a way to earn some extra cash if your income has been halted due to the virus.

Did learning about managing your finances catch your eye? To invest in innovative companies or to raise investments through the STOKR marketplace, follow this link.

BY DIAMAAN GUEYE