Since the onset of the coronavirus, it is predicted that hundreds and millions of people could be left without a job. As of the end of April, almost 3.8 million Americans have made job claims, while the number of Australians that have applied for unemployment benefits has reached almost 1.3 million. With unemployment rates averaging 15% and predicted to hit 20%, this steadily increasing rate is worrisome. What’s alarming, is that these rates have even surpassed those of the great depression.
To tide through these difficult times, there’s, unfortunately, no quick fix. The best thing to do is to improve your financial health during the uncertainty. From cutting back on your spending to understanding the tools you have available, here’s some tips to put you on the path to a better financial situation, and a less stressful tomorrow.\
Assess your financial health
There has never been a more critical time to start assessing your financial health. With job losses and shortened working hours, it’s integral that you take a closer look at your spending. Gather all your bank statements and credit statements, and work your way through each transaction. Sure, it might be an arduous process, but these are unprecedented times and you need to plan for periods where you may have low or zero wages.
Once you’ve properly assessed your outflow of money, check the funds you have coming in and the amount of savings you currently have. After all of that has been worked out, you’ll have a clearer picture of your financial health, and be able to make adjustments and changes. Figure out where you can cut your spending and do so early. If you don’t reduce your spending now, you’ll take an even bigger hit down the road.
Start cutting back
If you’re not sure where to start when it comes to cutting down on what you’re paying for, start by separating your expenditure into those that are necessities, and others that are optional. Some other costs you can contemplate reducing include:
- Takeaway and delivery services: Instead, focus on making your own meals. While it may not seem like much in the beginning, it’ll add up to more than you think in the long run
- Subscription services: Especially ones that you aren’t using as much. You’re probably subscribing to way more apps than you think, especially on your phone.
- Transportation: If you’re running errands and isn’t too far away, try walking there instead of spending money on public transportation.
Push back your retirement date
Not keen on minimizing your expenditure? The next thing to consider is working longer. If you had planned to retire at 65 for example, think about working for an extra two to three years to offset a hit in your living standards.
While not ideal, the additional income will allow you to maintain your current lifestyle without having to make any drastic changes.
Make some investments
When it comes to savings, you can get some interest from placing your money in a bank but why not maximize your savings by investing it instead? Investments can help you with earning a sizable amount of cash as it grows in value. If you’re new to investing, it may seem like a daunting venture in the beginning, but there are plenty of resources online that will help you get started.
Active ETFs (Active Exchange-Traded Funds) are a great investment to consider. With Active ETFs, you’ll be owning a portfolio of securities with low fees, and that are managed by someone that’s an expert in the matter. In comparison to other investments, they’re also much less volatile with a greater diversification of risk.
Maximize your income
Another way to improve your financial security is by supplementing your income. Look for side jobs that allow you to work from home. Just be sure that they aren’t potential scams, and you’re not paying out of pocket just to secure a job. Some sites that you can check out include freelance websites such as Upwork and Fiverr.
For those that are okay with working away from home, some sectors are desperately looking for workers. Job search websites such as SEEK and Indeed are a good place to get started.
From cutting back to taking a closer look at your financial health, there are ways to improve your finances during this trying period. Other things you can do include downsizing your home, moving back in with your parents, comparing the credit cards that you’re currently using, and more.
One important thing to remember during this chapter is to stay positive. With your finances dwindling, it can be challenging to have a favorable outlook. However, know that this period will pass, and by following the tips detailed above, you’ll emerge stronger and will be in a better monetary position than most.