Written By- Yasir Ilyas- Global Head of HysabKytab
The ongoing pandemic has left a considerable dent on economies and wreaked havoc on bank accounts all over the world. Just as the lockdowns were beginning to ease down and offices were setting out for their journey back to “normality”, the looming threats of a second Covid-19 wave have brought businesses at a crossroad. The unpredictability of the second strike of coronavirus, at a time when the aftermath of the first wave have not subsided, warns of severe financial upheaval. Due to these unexpected dips in the financial market and the employment rate, smart budgeting has become a requisite in 2020.
Here are a couple of budgeting tips to help you improve your financial health considerably and make your account crisis-proof despite the current spike in unemployment.
Back to basics
Make a list of indispensable items. Cut out everything from your monthly budget that you can live without. Yes, that means the cereals, subscriptions, and memberships. The only three things you need to survive are food, clothes (you’re in quarantine so recycle), and a roof over your head (rent).
Look into your emergency fund and see if your savings can cover you for 3 – 6 months while you look for a new job. If the answer is no, then consider dividing the load of your outflows between your savings account and your credit card.
Thanks to self-isolation, many of your previous expenses such as gym membership, social hangouts, shopping for work clothes, and travel, have been eliminated. The money you save from these non-essentials can go directly to your savings account.
However, don’t budget and forget about it. The decline in Corona cases has enabled industries in Pakistan to go from complete lockdown to partial reopening in just a few weeks. Expect constant changes in the next few weeks. Reexamine your trimmed down budget every time your bills arrive or the government takes a step toward reopening the economy to its full capacity.
Diversify your income
With a lot of companies not yet ready to hire full-time employees, the possibility of remote/contractual/freelance work is high. Look for multiple streams of income, even if they’re temporary.
In a nutshell, don’t put all your eggs in one basket. Broaden your options and earn through different projects. So even if you lose your primary source of income, you would still have the cushion of earnings coming from options 2, 3, or 4 to fall back on.
Remember: Your sole focus right now is to survive the pandemic.
The world is seemingly heading towards a recession. As a result, the stock prices of many companies are going down at an alarming rate. However, a downward trend is usually followed by an upward trend which means you could make a lot more in the long term if you invest wisely right now.
Log your expenses
Log your expense in so that you know where your money is going. You can download applications to keep a track of your outflows and save in the long run.
If you find out that most of your monthly budget is being spent on groceries, head to a kirana store for monthly groceries instead of department stores that usually stock imported items. After all, you’re only human and a jar of Nutella always seems like a good idea (to your taste buds at least).
While the government was quick to help people during the first wave with its different financial schemes, there is only so much it can do. All this boils down to is adopting a habit of personal financial management (PFM) that helps you keep track of your assets and tailor your expenses accordingly.
A good way to start on that is to download PFM applications, which let you organize your savings, spending, and budgeting, and gives you a comprehensive report of your finances. Where this application is heaven for the less tech-savvy people with its ease of access and smooth navigation, the feature of creating a “saving goal” which keeps giving you a reminder for putting some money aside, is a blessing for those who tend to wander off their budget easily.
Nevertheless, as it may take businesses some time to recuperate from the aftermath of COVD-19, it’s important to remember that this is a temporary phase. The fact that most industries have finally come out of their slumber and reopened operations heralds good news for people struggling with the financial impact of the pandemic.
Remember this pandemic will pass by but a good financial habit gained during this time will stay with you forever.