The pandemic is changing the way people think about money. Our personal finances have borne much of the brunt of the pandemic – be it our savings, investments, insurance or debts. As a result, we have learnt valuable lessons about the importance of being financially prepared for prolonged periods of uncertainty and disruption.
Despite the continuing uncertainty, there are a few steps you can take to build financial security for yourself and your family.
Give your budget a makeover. The current situation is not normal. With great uncertainty as to what is next for many employees and businesses, ensuring you are able to cover essential expenses should be your top financial priority. Re-evaluate your budget to find new ways to conserve
cash.
And if you are still looking for ways to manage and track your finances, you could try out budgeting apps like Spendee,
Wally, You Need A Budget (YNAB) and Monefy.
Reconsider your debt strategy. Carrying debt, especially high-interest credit card debt, is never advisable. With the stock market volatility, interest rates have fallen sharply. If you have loans, it may be time to refinance at a lower rate. Look for a balance transfer credit card to secure a lower interest rate on credit card debt.
Add to your emergency savings. Previously, the common advice was for people to save three to six months’ worth of expenses in an emergency fund. But because of the uncertainty caused by the pandemic, many financial experts are now recommending keeping a year’s worth of expenses saved in the fund. This might be a daunting task, especially for those just starting out, but the trick is to take it one month at a time. Start by trimming nonessential expenses and dedicate any extra money saved to build your emergency fund.
If possible, invest more. Many people who already have invested in the stock market have seen some extreme volatility in their portfolios over the past year, with extreme dips and rises. However, if you can afford to, consider contributing more to your retirement savings and other investment accounts. Remember the adage: “Time in the market beats timing the market.” Patient investors can gain a larger profit by allowing their investments to grow over time.
Take advantage of additional financing. This one might require you to do some homework regarding available financial aid. In January, the government announced the RM15 billion Perlindungan Ekonomi & Rakyat Malaysia Assistance Package, which contained tax relief incentives for individuals, families and businesses, as well as additional welfare benefits. For example, the i-Sinar programme by the Employees Provident Fund currently allows all active members to withdraw a minimum of RM10,000 from their accounts.
Help when you can. Consider ways you can help others if you can afford to. Find out if your community has a food bank, and consider donating groceries or personal protective equipment. Support local businesses to provide revenue and help keep their doors open.
But above all, continue to educate yourself. Aaron Tang, who runs the Mr Stingy personal financial blog, wrote: “Life is a continuous journey of learning. To stop growing is to die.
“I read from a variety of sources – primarily blogs, online publications and Twitter. Much of what I learned about money, I learned from free websites. I’m also trying to read more books, as they get to a level of depth you won’t find online.”
Hopefully, with these ideas, you can begin to take control of your own personal finances to better navigate difficult times.
