What is Pandemic?
It is an epidemic occurring worldwide, crossing international borders and affecting a large number of people.
An epidemic is a disease that affects many people within a community, population, or region.
Pandemics and epidemics are not common to come by and may take a long time before any nature of plague is declared, especially worldwide. However, the occurrence of a plague brings many changes, and its effects are felt adversely over a long time. It is unpredictable; therefore, people and governments may not have enough time to plan how to handle it.
The occurrence and declaration of COVID- 19 as a pandemic by the World Health Organization (WHO) in March 2020 due to a surge in the number of infections in countries like Italy, Iran, South Korea, and Japan led to many changes and among them panic to people worldwide and governments.
This pandemic has adversely affected economies where different businesses and companies have had to shut down. Other organizations have laid off their employees due to the challenging economic times, which made them unable to continue paying the employees.
With such situations, it becomes essential to manage the little finances that people have for them to meet their basic needs.
Here are some of the Dos and Don’ts in managing finances during a Pandemic.
What to do to manage finances during a pandemic
- Control Your Spending Habits.
The great effect brought by the pandemic is it may come with losses of jobs, reduced salary, being sent on unpaid leave, decreasing sales for the business community, and loss of capital due to the expiry of perishable commodities or total closure of a business. This means the flow of income in terms of a salary or sales turnover either reduces or is cut off completely. Wise spending of the available finances is therefore paramount.
Expenses should reduce to only essential (necessary) expenses like food, house rent, and other essential bills, i.e., water, electricity, insurance premiums.
Consider practicing bulk buying for the essential commodities. While bulk buying saves you from repeated exposure to the pandemic when frequently buying in small quantities, it also saves your finances.
Cut all non-essential expenses or maintain them at the bare minimum.
- Increase Emergency Fund.
An emergency fund is a financial safety net, or a cash reservoir kept to take care of future calamities or unexpected expenses. The amounts recommended by financial planners differ with some advising one to have three (3) to six (6) months’ worth of your monthly expenses in the form of cash or highly liquid assets, while others suggest as much as one year or more of your income.
A pandemic may bring about job loss, reduced salary, or decreased sales immediately or in the future. It is, therefore, essential to save towards taking care of the unknown.
COVID- 19 pandemic came with people being requested to work from home and some businesses thriving online. This meant that people would save on commuting for employees working from home and an increased customer base for companies selling online. The finances saved or made from such sales can be added to your rainy day fund.
- Hold on to your Job
As stated earlier, pandemic causes disruption of the economy; thus, companies that were making huge profits before the epidemic may record reduced yields or losses, causing them to do massive layoffs. If, during a pandemic, your company has not laid you off, guard your job with all you can by maintaining excellent performance, and withholding complains.
- Maintain Good Insurance Coverage
An insurance cover such as health, education, disability, life insurance may help you prevent or overcome a crisis.
- Restructuring debt
Loss of a job, reduced salary, closure of business, or decreased sales may make it difficult for a lender to promptly repay their debts. Restructuring of a loan to pay over a longer period may help ease the pressure of remitting large monthly repayment amounts during a pandemic. It is advisable to convert short-term loans to long-term loans.
- Bad Credit Loan.
A pandemic may lead to a business that was performing well to lose its sales and finances to a level of the owners finding themselves in bad credit score/ rating. This may, in turn, make their future borrowing difficult. Taking a bad credit loan from companies such as LoanPig.co.uk would help the business get cash flow to revive it by acquiring a quick cash injection through bad credit loans.
What NOT to Do in manage finances during a Pandemic
- Unplanned Purchasing
As different businesses struggle during the pandemic, they may result in lowering the cost of items that were selling at a high price example would be Television sets selling at almost half price, cars selling at relatively low prices from distressed sellers, and houses or property selling at incredible prices. It may be very tempting to buy such items, but it is not the best decision to make during a pandemic. Maintaining finances as much as possible should be the primary goal during an epidemic since it is not known how long its effects will be felt.
Most business owners, in an effort to keep their businesses afloat during the pandemic, they have adapted online selling. Good displays are seen online at a discounted price with the promise of home delivery. If the items are not necessary at the moment or not essential, refrain from buying them.
- Selling Stock out of Panic
The threatened economic state of the Country and the world at large may force stock prices to drop drastically. Stock investors may panic and sell their stock aiming to salvage a percentage of their investment. This may result in incurring significant losses. Studies have shown that the market recovers with time; thus, the stock prices may rise significantly in the future.
- Over Buying Stock
Some investors rush out to buy the stock when prices drop. While this is a good move in a thriving economy, it may not be advisable to overbuy stock during a pandemic, especially if the investor does not have enough finances for their daily need. The prices of the stock may take too long to rise back to normal prices if the economy takes too long to overcome the pandemic.