With over 275,000 global coronavirus cases and 11,500 plus deaths (21-Mar-2020), Covid-19 the invisible disease has truly wreaked havoc on our personal finances ( See the footnote).
This pandemic situation may lead to a global economic crisis as cities shut down, companies close and individual losses their jobs. I can therefore confidently write that the Coronavirus has affected everyone.
How to Manage Your Personal Finance during Crisis
The question is, how do you carefully manage personal finances in this uncertainty time? Well, I have explained 5 things you may consider.
1. Assess your emergency savings
If you have been saving over the past years, then this is one of the situations to use your savings for an emergency. However, you should first assess your current financial position. If you are short of cash, be prepared to convert some of your long-term investments such as equity and bonds into a cash product.
2. Check your budget
The emergency situation is a time to review your budget and be more prudent with your expenses. We do not know how long the pandemic will last, but many people will lose their losing jobs. You should review your budget and reduce the non-essential cost to increase your savings balance.
3. Prepare for potential city shutdown
London has ordered the bars and pubs to close their doors, Italy is using Armies to enforce a curfew and New York City has asked some staff to work from home. If the virus is growing in your city, expect shutdown any soon. You should takeout some cash and purchase some foodstuff as price may increase or there could even be a food shortage.
4. Talk to loan providers
If you have borrowings such as personal loan, student loan, mortgage or credit card, it best you explore talking to the loan provider for deferral of repayment and possible rate cut.
5. Do not practice panic sell-off
Yes, it is good to sell equity or bond positions if you are low in cash in this emergency times, but you should not just sell off all investments. You should be intentional and strategic with your investment buy and sell-off. As bond yields are increasing while many currencies are weakening, maybe you should consider rebalancing your investment portfolio as the risk of default is high in some sectors and new opportunities are emerging. For instance, you can buy more government bonds and drop corporate bonds or take a long position in some currencies like Pound sterling (all-time low since 1985 years). However, it should be a calculated and strategic risk.
6. Consider helping others
We know that many street vendors and similar professions have no stable income. Therefore, they will earn no income as cities shut down. If you can, please consider helping someone either buying foodstuff or cash gift. Even if it is one person, it will impact their lives.
In conclusion, it is essential that you follow the health advice and safety tips shared by health authorities and other bodies such as WHO. We should not promote fake news, discriminate against those who are infected. Practice more physical distance and more of social connection through technology.
Your health is your wealth! Take precaution and pay attention to your symptoms.
I am very confident that we will overcome this situation. Wish everyone all the best as we start to work from home.