Financial Lessons Due to the Corona Virus Crisis
The Corona Virus caused many crises in various countries, including Indonesia. Not only health problems, productivity and the economy are also falling apart. Then, what can citizens like us do?
At the very least, this pandemic makes us learn about several principles for managing finances in a crisis. In addition, we also have to learn to save money to get through uncertain times like today.
The following lessons about finance we can apply because of the corona virus and also how to save money to get through this crisis.
Have emergency savings
You need to have money saved in a savings account at all times. The amount must be enough to cover three to six months of living expenses. This savings is designed to allow you not only to cover unplanned bills such as home or car repairs, but also to get you through periods of unemployment.
By 2019, the average American unemployed remained that way for 21.6 weeks. Therefore, having a healthy emergency fund is very important, because those who are now losing their income due to Corona Virus.
Of course, it is difficult to build emergency savings when you are already deep in the midst of a crisis. If you have just been laid off, you are clearly not in a position to start building cash reserves.
On the other hand, if you are still collecting your regular salary, take this time as an opportunity to save your savings in the coming weeks.
We don’t know whether COVID-19 will spur a full recession, but even if it doesn’t, it’s clear that the economic impact won’t be short-lived. The best way to protect yourself from many unknowns ahead is to have a full emergency fund.
Don’t return to your investment
Some people don’t save a lot of money in savings because they have stock investments and their numbers can withdraw it in a financial emergency. But the stock market has been beating in the last few weeks so anyone who tries to liquidate investments for cash now risks facing huge losses.
Investment cannot replace emergency savings. If you quit your current job and don’t have money in the bank, you may have no choice but to cash in a few shares while it is down. But it can be a hard long term blow to your finances.
After this crisis is over, remember one important rule: Never lock money in stocks that you might need to use within 10 years. Instead, increase your savings so that you have the flexibility to leave your investment alone when they are down and let it recover.
The Corona Virus Crisis shocked millions of people, and it’s too early to say when things will start to normal. If you are not financially ready for a situation like this before, promise to at least learn from this almost unexpected experience.
With a little luck, you will recover as quickly as possible and set yourself up to be financially safer in the long run.
Then, What Must Be Done to Save on Corona Virus Crisis?
We do not know how long the Corona Virus pandemic will be in Indonesia. COVID-19 has influenced many aspects including the national economy. For this reason, as long as things have not improved, we need to try to be thrifty.
Here are tips you can do.
Whether your work is affected or not, look at all your bills and identify which ones are important and which you may not need to pay immediately. Check-in with a service provider because some may offer help or an option to skip payment temporarily.
You have to start reducing unnecessary and free expenses in case things get worse. These expenses can include entertainment, certain foods, and luxury. The savings must be put into a savings account as an emergency fund if you lose income in the next few weeks or months.
Reach credit cards
If you have lost income and are having trouble paying debt, contact your credit card provider immediately. In general, credit card providers offer trouble programs, and some will even give a small period of not paying.
Remove automatic debit payments
If you feel you will experience a cash crisis, you should consider removing automatic debit payments for your bills and other utilities. This way you can give yourself more flexibility to prioritize expenses.