In addition to the health considerations, one of the major negative impacts of the virus is a financial one. Social distancing measures are put around the world to help slow the spread of the virus. This had a toll on the world’s economy leading many people to look at job losses, income reduction, and overall financial instability.
The good news is, you don’t have to just sit back and let your financial stability be destroyed — you can work to limit the impact. Here are four smart financial moves you may want to take now if you’re worried about COVID-19 economical impacts in the long term.
An emergency fund is a key
There’s never been a better time to have a big emergency fund. If you don’t already have three to six months of living expenses saved up, do everything you can to start beefing up this fund, even if that means eliminating nonessential spending. With so many common sources of spending currently put on hold — think travel, eating out, fuel and entertainment — your household spending is likely to decline which means you will be able to put some money on the side.
You would want to even set a budget to your current expenditure, so you won’t get caught wasting time and money on stress online shopping. Instead, you can use the time spent on the internet to sell the stuff you don’t need such as second-hand furniture, clothes, tech goods, and more to make some extra cash. Start decluttering and post the items on dubizzle.
That way, the money will be there if you need it in the event that your economic situation gets worse.
Consult a financially literate friend or acquaintance
Many countries have been offering financial relief to help people, yet not many of us are aware of how to use the opportunities that are offered to us. You don’t need to hire an advisor, however, it is smart to stay financially literate or talk to someone you trust who understands and has financial management skills, as well as the measures, implemented by the UAE government to help guide you through your options.
UAE has been offering some options following the directives of Mohamed bin Zayed. Abu Dhabi banks – First Abu Dhabi Bank, Abu Dhabi Islamic Bank, Abu Dhabi Commercial Bank in coordination with Abu Dhabi Department of Finance & Abu Dhabi’s Department of Economic Development, have put together a list of 17 initiative packages to help individuals and SME’s through these challenging times. These initiatives include deferring installments on new loans, reduce interest charges on new loans and credit cards, and more.
Don’t take unnecessary risks
Events are changing faster than ever and trying to bet on an industry or another booming will only add to the stress. Let alone that there is no guarantee of what will happen next. So do not go spending the money you have on new investments, as we don’t know when and if crashing projects will recover. Even if you do have a ton of savings, it is safe to say that now is not the time to go on a stock-buying spree because of an article you read online.
Simultaneously, fight the urge to take a loss and withdraw all your money from the market. If you do have investments, they’ve likely lost value recently, however, if your long-term goals didn’t change today, your investments probably shouldn’t either.
Cancel unnecessary subscriptions
Reviewing your monthly spending is a prime opportunity to cancel unnecessary subscriptions. These extra funds can spare you from dipping into your emergency fund. Apps now make it simple to sign up for their services, and it’s often easy to let them continue long after you don’t need them because either you’ve forgotten about the subscription or it’s difficult to unsubscribe. Analyze your credit card for recurring charges and take the time to unsubscribe from the ones you do not use.
Other subscriptions such as gym memberships, for instance, aren’t usable for those sheltering in place and social distancing. Though many gyms are putting accounts on hold and aren’t collecting fees, it doesn’t hurt to get in contact with yours to make sure you don’t get charged till you can head back in for a workout.
Remember to stay aware of your finances during this time, and plan it out in advance!