Smart ways to manage your finances during Coronavirus pandemic

* Financial worries can affect mental health, well-being ─Experts

* No going back to ‘normal’ after a crisis as Coronavirus
Isola Moses | ConsumerConnect
As a consumer in any economy, it is certainly doubtless that managing your monies is important at all times.

Economy experts even suggest that it becomes more essential during a crisis like the current, ravaging Coronavirus (COVID-19) pandemic.

Consumers worldwide are beginning to realise some economic consequences of the outbreak of the novel virus already, but what is less visible is the obvious finance-induced stress triggered by the uncertainty in the economic horizon.

Worrying about your finances can affect your mental health and well-being. How can you budget your expenses to stay financially and mentally resilient during these times?

Beneath are some suggestions to consider when budgeting during a crisis period as Coronavirus pandemic, as pieced together at hbrascend.org.

a. Examine changes in your expenses
The crisis might have brought significant changes to your work and lifestyle.

Take stock of your new financial situation—what is good about it, what can be improved, and what are the actions you need to urgently take to avoid a downturn?

Do a SWOT (Strength, Weakness, Opportunity, Threat) analysis of your finances and use the Eisenhower matrix to make decisions, both of which are described in more detail in this piece.

i. What expenses have decreased?
Look at your essential expenditure and how it is changing now. Before the crisis, essential expenses might have been 50% of your monthly income.

Now that you’re probably working from home during the crisis time, see if you’re able to save on some of daily essentials, such as transport, work lunches, work clothes, etc.

This can now help you boost your monthly savings by 10%.

Your discretionary expenditure is also likely to decrease. Before the crisis you might have spent 30% of your income on going out, entertainment, restaurant meals, etc.

Given the lockdowns or restrictions to leave your home, you can generate significant savings here, up to 20% of your monthly earnings.

Have a look at your previous bank statements and estimate how much money you are saving on a monthly basis on things that you no longer buy due to the current emergency.

ii. What do you need to invest more in?
With these changed ways of working and living, new essentials would have emerged in your expenditure: a new laptop, more Internet data and better bandwidth, video streaming services, gaming apps, etc.

Make the distinction between what is essential for work (which your employer should cover) and what is essential for you personally.

For instance, operating work-licensed software from home is a cost for your employer whereas buying a streaming video subscription would be on you.

To make things easier, look for free services or discount vouchers, or share the costs with family or friends if possible.

A note on essential expenditure: As several governments across the world continue to intensify efforts at reducing the financial burden on citizens through stimulus packages, palliatives, and the like, update yourself on the current policies and reach out to see what support they are willing to offer you and/or your family.

b. Re-allocate your spending
If your income has been affected by the crisis, you can use the savings you’ve generated to supplement it.

Alternatively, that money can help you decrease your debt, build an emergency fund, or top up your savings.

If you are in a good financial position with no debt and healthy cash deposits, consider using your surplus to help a family member or a friend, or to invest in future-proofing your finances.

c.. Future-proof your finances
Having performed the SWOT analysis for your finances, you might have noticed weaknesses or threats to your ability to produce income.

These may include limited skills, over-dependency on a particular location, the nature of your work and the demand for it, changing trends, etc.

Here are two straightforward ways to improve your financial standing.
i. Improve your skills
Make a list of the things that could slow your financial progress and start tackling the ones that would cause the greatest disruption.

This might mean that you learn a new skill, consolidate your knowledge, perfect your technique, etc.

ii. Diversify your income
Relying on a single source of income can be a great threat to your financial situation, especially if the crisis is preventing you from working.

In addition to building your skills and consolidating your knowledge, think about how you can leverage those skills to start a side hustle, monetise your expertise, and diversify your income sources.

There is no going back to normal after a crisis because the definition of normal is likely to change.

Take this time to ensure that you prepare yourself financially for what the new norm will be.