Coronavirus Covid-19: All Crises Are Financial (How to Prepare)
Social distance, self-isolate, wash your hands, stay six feet apart, use hand sanitizer... China virus? Haha, no offence but Trump said what he said!
Nonetheless you can probably google all of these today and find a story related to the health pandemic caused by Covid-19. This is a global pandemic, so it is essential that we all adhere to preventive measures recommended by the WHO and our Ministry of Health. But what these institutions don’t advise on is personal financial health. Whether it be a health crisis, natural disaster or the obvious financial crisis, people are always left feeling uncertain and anxious about MONEY! Personal finance is something that only a small handful of advisors, like me, address in these times.
Believe it or not... actually, scratch that. Accept it or not, money is a very important thing to understand especially in times like these. It may seem bourgeois but getting a grasp on your blue marlins (242 stand up!) or Benjamins (global currency) will make such situations much less stressful for you.
This is how to prepare for crises:
STEP 1- Analyze your current situation
Me, myself and I need to have a heart-to-heart talk at this point. I practice this continuously in life because sometimes you need to be the one that admits that you are not in a good position. Doing this is not as easy as it seems. It is hard to see your own faults, but this is one of the greatest skills to master.
You need to know how long your savings can last you (should be at least 3-6 months), how secure your job is, how heavy will the industry be affected that you work in, how much your monthly mandatory expenses are, how much debt you have, etc. You need to have a full financial self-reflection. Doing this with a bottle of wine is not uncommon by the way. It helps to stay calm especially if you realize you’re facing some serious financial challenges...And I know that sounds harsh but I'm here to help you THEN hug you, not the other way around.
STEP 2- Cut back and create a budget
At this point you should be completely aware of what you need to adjust. Like they say, the hardest part is finding the problem and the easy part is fixing the problem. Well I don't know if 'they' say this, whoever 'they' are but I always say it.
Start scaling back and mainly cut out those unnecessary expenses and those excessive monthly subscriptions. There is NO need to have Apple Music, Spotify and Tidal. Pick one.
Then create a budget where you can track all your expenses and spending. They have apps and some people use excel spreadsheets to track all their finances and it almost becomes a lifeline of sorts. I recently had my laptop stolen. I was more devastated that I never backed up my personal finance spreadsheet than having my laptop stolen. True story. I now use an app called YNAB to track my expenses but they charge a fee.
Link to a blog on some of the best free budgeting apps:
https://www.royalfidelity.com/news/blog/make-budgeting-a-breeze
STEP 3- Make more money & SAVE
I know, easier said than done but anything can happen at this point and losing your job is not farfetched. Get some overtime in, pick up a second job if you can and just channel your inner hustler. And no, I surely don't encourage any immoral acts, but I do encourage a certain mentality when on the paperchase. After the pandemic you don't want to be the person thinking "well the economy is terrible so I doubt I can find something else to do.” You must be the person that thinks, "hey the food stores are packed, I'm sure they could use an extra hand or two.” Good old fashioned manual labour is honorable work.
Now with cutting back your expenses you should already be saving but, if you are able to, make a little more also. I can hear the cut eye and suck teeth from here but cutting expenses and making more money is basically a financial cheat code. It's like entering a GTA V cheat code in real life. It's not simple but it's so worth it (had to slide that analogy in for all my gamers out there).
You want to save this extra money and either keep it liquid in a high interest savings account, in an Asue Savings account (Try Fidelity Bank's) or in a term deposit (least liquid). Realistically, you should always have 3-6 months of expenses saved liquid as an emergency fund but if you don’t, work to get there. If you do, then this is a time no better than other to have a reason to add another 3-6 months on top of it. You need to fluff up your savings right now and not only to survive in worst case scenarios, but we will get to the other reason soon enough.
Step 4-Payoff high interest debt and talk to your loan officers
That credit card that you've been making minimum payments on for the past 4 years needs to be payed off. At a time like this, you need to get rid of high interest debt because it is eating away at your future earnings. Think about it, if you owe $2k on a credit card and they are charging 18% a year then essentially you are losing 18% of $2k every year. When if it was paid off you would be losing nothing and still have access to the card IF NEEDED. So, if you have the cash, payoff the credit card and if the going gets tough then you still have access to the credit card. BUT when I say if the going gets tough, I mean TOUGH! I'm talking Salty Spitoon tough (had to slide in that analogy for my SpongeBob fans, diverse-I know).
Also, you will want talk to your bankers and find out what measures they are taking during a crisis to look out for their customers and if not for all customers then ask how they will work with you personally. It is so important to not be shy or embarrassed when you are managing your personal finances. You need to treat yourself like a business and negotiate with your banker.
Step 5- Stay Calm and keep investing on
Now once you have completely done all these steps and you've made sure your family is in a great position then you should continue investing. Remember I talked about doubling down on saving and why it’s very important outside of emergencies? You see during these times it's great to have cash because you find that you can get great deals you otherwise might not have. People sell well below market value and opportunity arises during crises. I spoke about investing during crisis (bear markets) in my previous blog, so read my blog 'Bear Markets: The Stock Markets Version Of Black Friday Sales' to see how you should be investing during this time.
*Bonus Tip*- Suck up and provide value
Calling all essential workers! This is as great a time as any to be a little chummier with your coworkers and the executives within your workplace. Keeping a strong relationship with the people within the establishment is crucial at this point.
Or if you haven't already, display how you provide value within the establishment. Whether you bring in a lot of revenue or you are the core of essential operational tasks, be sure everyone knows!
You can, and should, even do both. The main goal here is to merge the company’s existence and you as much as you can. Every little bit counts towards job security.
Following these steps are a sure way to make huge strides towards being prepared in no time. Thank you for reading, I appreciate it. I pray that everyone stays safe, stays clean and stays healthy!
Thought I forgot about that hug huh? Nope.
- Quentin Gibson
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