- Date : 17/06/2020
- Read: 4 mins
No matter what crisis is going on in the world, the bills must be paid, and the show must go on.
When the coronavirus pandemic hit, people were first worried about their physical health and well-being. However, over the past couple of months, this worry and panic has moved on and there’s a threat to our financial health as well. Most industries have seen significant pay cuts. A lot of people have also lost their jobs. A change in your income pattern during the global pandemic may have made it difficult to pay your bills. So here are some steps you can take to manage the situation.
Look at the funds you can use
This is exactly the kind of time for which you’ve built your emergency fund. Your emergency fund should be easily accessible and have enough money to meet 3–6 months’ worth of expenses. If you don’t have an emergency fund, look at other forms of savings and investments such as fixed and recurring deposits with your bank, mutual funds, etc. In case these aren’t enough, you can look at liquidating your assets such as gold. But that should be your last resort.
Sort and prioritise your bills
Every bill needs to be paid. However, some bills are more urgent and of higher priority. Some bills can be delayed, or the expenses can be cut. For instance, you can discontinue all your streaming subscriptions for now. You may also be able to default on certain bills and pay it later with a penalty. But your electricity bill, taxes, and insurance premium should be top priority. As for any debt you may have, you can look at opting for the loan repayment moratorium, the date for which has now been extended to 31 August.
Talk to service providers
There isn’t a single person who hasn’t been affected in some way by the ongoing coronavirus pandemic. This is perhaps the one time in history that everyone is more or less in the same boat, experiencing the same things. Hence, a lot of people may be sympathetic to your current financial situation if you reach out to them and make an honest case for yourself. For instance, you could talk to your landlord about deferring a part of your rent by a few months or bringing down the rent just for now. Also contact service providers like banks, credit card issuers, utility providers, etc. and learn about the options you have.
Rework your budget
After you’re done tackling your urgent bills and talking to all the necessary people, take a look at your budget and rework it for the next few months. You can’t rely on the budget you were following before the pandemic hit. If you suffered a pay cut or job loss, your financial situation may be drastically different now. You’ll have to look at all your discretionary expenses such as shopping, eating out, etc. and reduce them or cut them out entirely for a while.
Consider a side hustle
Having a second source of income is advisable, even in normal circumstances. But now, more than ever, you should seriously consider taking on a side hustle – whether it’s a freelance gig or a part-time job. For instance, if you’re a video editor, you can offer to edit clips for YouTubers. If you can cook well, look at delivering food to those in and around your building. After all, a lot of younger people living on their own don’t know how to cook, and with coronavirus around it’s not the safest to order food from restaurants or eat out. Another option is online teaching. Whatever field you’re in, if you have a few years of work experience, there are many online platforms that seek professionals who can conduct classes and mentor students.
Don’t be afraid to ask for help
Asking friends or family for financial help can be awkward, and it’s understandable why you would want to avoid doing that. But if you don’t have enough savings to fall back on, don’t rush to take a high-interest personal loan to pay your rent and close your bills. Instead, it’s better to ask for help from your parents, or a sibling, or a close friend. If their job is not affected, and if they have sufficient savings, they may be able to bail you out.
Finally, it’s essential to have a positive mindset and not worry yourself sick thinking about finances. It’s easy to go down that rabbit hole, but it will do you no good. You need to maintain a cool head and make prudent financial decisions if you are to get through these tough times. If you are unsure of how to manage your money differently post the lockdown, this piece will help you to manage your finances in an effective and smarter way.