What 2020 Taught Us About Finances

By Umer Malik

The COVID-19 pandemic has become a stress test for many. Not everyone was ready for the forced changes. Many have lost income, lost their jobs, or even their entire business. But even those who were spared these hardships had to drastically rebuild their way of life. It is still impossible to say for sure how the situation will change and what awaits us. But we can already talk about what 2020 taught us.

Try to Save Money for a Rainy Day

Before the outbreak of the pandemic, many people were left without savings. Such statistics have been recorded for several years. But even if you are a supporter of optimistic views and always hope for the best, it is advisable to play it safe.

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An emergency fund will help you out in the event of force majeure: illness or job loss. Try to save at least a small part of your income every month. These savings can be kept in a bank account or in a bank deposit: interest will be charged on the savings and it will compensate for losses from inflation. In addition, the money in accounts and deposits is insured by the state.

Solve Financial Issues Online

During self-isolation, many realized that most routine tasks can be solved remotely. But some older people had a hard time – they hastily mastered the online payment of receipts, loans, and taxes. It turned out to be easier for those who already had banking applications installed.

If you create all the necessary accounts for yourself and your relatives in advance, establish the online payment of bills, then the closure of the nearest offices of banks or government agencies will not be taken by surprise.

Make a Financial Plan

Spending control helps you optimize your expenses. But it's better to act comprehensively and create a financial plan. It will help you to correctly prioritize and achieve your goals faster – for example, save up for a large purchase.

Schedule your actions several months in advance. Determine how much and on what you will spend, how much you need to save. Save money for entertainment and unforeseen situations but try not to go beyond it. So, you will be ready for unplanned spending, and at the same time, you will not avoid the temptation to break loose and spend all your money on trifles.

It also a good idea to have a source of additional income. For example, you can start trading Forex, which is a great opportunity to apply your skills. It is available all over the world from India to Vietnam. If you don't know anything about it, visit the Forextime blog. It is one of the best sources of information on Forex trading and it will be useful both for beginners and experienced traders.

Keep Track of Income and Expenses

During the pandemic, most have changed their lifestyles. People began to review their finances: spending on trips to cafes and hairdressers disappeared, but water and electricity bills increased. While preparing food at home every day, many drew attention to the cost of meals, for which they were previously ready to overpay in a restaurant. The global crisis has forced many to become leaner.

In order not to lose this skill, you need to bring it to automatism and make it your habit. Keeping track of income and expenses for at least a couple of months will help you understand where your money is going and learn how to spend it wisely, avoiding impulsive purchases that hit your budget. You can monitor your spending in different ways: using financial planning services, a spreadsheet in Excel, or a regular notebook.

Stop Mindlessly Taking Debts

In case of emergencies, the burden on the personal budget increases, and extra debts can make it unbearable. Before taking loans or borrowings, assess whether this money is so necessary right now and how you will return it. Do not rely on the chance if you are not sure that you can pay off on time.

If you have already encountered difficulties in managing finances, paying off debts, try to negotiate with the lender about restructuring it – that is, about changing the payment schedule. In addition, some borrowers can arrange a loan vacation.

ALSO READ: Taking Care of Finances Amid Coronavirus Crisis

Insure Life, Health, Business, and Property

The pandemic has shown that unforeseen risks can result in large losses. Various insurance programs help protect against sudden difficulties. You can ensure not only your house, cottage, car, but also your health or business.

The policy does not guarantee that nothing bad will happen but it helps to cover losses that you may face. Some insurances combine risk protection and the ability to generate additional income.

(Disclaimer: The article is sponsored and hence promotes some commercial links.)