This week my husband lost his job due to COVID-19. Well, technically he is still employed. But as of the end of next week, he will be forced to take unpaid leave until… actually, we don’t really know when. But, while there have been a lot of things about this pandemic that have caused me anxiety, our finances have thankfully not been one of them.
While we are fortunate enough to have a healthy emergency fund (thank you past Jane!), there are still adjustments we are making to our finances. We want to proactively ensure that we are prepared for the next few months. So, no matter what your current situation is, I wanted to share some steps that you can take now to manage the potential financial impacts of COVID-19. It is my hope that it also mitigates any financial anxiety you may be feeling.
Manage Your Mind
I know for some of you this will seem like a strange place to start. But if you’re familiar with my money philosophy you will know that I strongly believe that we can not take action on the practical elements of finance without first addressing our mindset. Anxiety and overwhelm specifically are emotions that tend to shut us down. They limit our creativity and our capacity to see possibility and potential and can lead us to avoidance or paralysis. Now is the time to calm your nervous system, manage your thoughts and bring your focus back to what you can control in this present moment. I shared some helpful tips on this over on Instagram just last week, you can check that out here.
Review Your Budget
The first thing I do before even setting a budget with my clients is to review all their expenses. Knowing where your money is going is SO important. Now is not the time to avoid looking at your bank statements, it’s time to investigate. Start by downloading the last six months’ worth of transactions. Go through and see what is being debited out of your accounts or charged to your credit card. What discretionary expenses can be cancelled? This blog post here will give you 20 quick ideas for where you may be able to cut back. Then, if possible, flow those savings into a separate savings account to build up your emergency fund. If your income has stopped or reduced and you have to dip into your emergency fund, don’t panic. That is what it’s there for.
We don’t often think about negotiating on our non-discretionary expenses, but especially during this crisis, there are ways to reduce these costs by having a conversation with your provider. For example, if you have a mortgage many banks are offering “loan repayment holidays” if you meet the financial hardship criteria. The criteria differ by lender, so check with your bank for details. If you don’t meet the criteria but are concerned about your cashflow you may still want to think about restructuring your loan – speak to your bank or mortgage broker to see what options are available to you.
If you are renting, there is also the possibility of negotiating reduced rent on compassionate grounds. This is completely at the discretion of your landlord. However, most will prefer to keep a tenant and reduce the rent short term than have to find another one. This is especially when open homes have been banned as part of the shutdown. Obviously, this should only be done if you truly are in financial hardship. Remember your landlord may also be facing financial difficulties during this crisis.
You may also be able to get assistance in reduced electricity and gas, which is an initiative supported by some governments. Again, call your provider to find out what you may be entitled to.
Governments around the world know the financial impacts of COVID-19 are very serious. As a result, many have announced significant economic stimulus packages. This is essentially a range of financial assistance packages for individuals and businesses affected by COVID-19. New measures are being added and schemes expanded regularly, so make sure you check your own government’s website for details. If you need assistance now, apply as soon as possible. For Australians, you can find information on your entitlements here, for UK residents here and US citizens here.
If all of this feels too overwhelming or you need more information or support, then ask for help. Now is not the time to put your head in the sand, be proud, embarrassed or complacent. Whether you reach out to a friend, loved one or a professional, sometimes having someone to take you through the process can make all the difference. You don’t have to do it alone.
See The Opportunity
While this might be hard to recognise at first, even in difficult times like these there are still opportunities – not just to survive financially, but also to thrive. Not all parts of the economy suffer at the same time. There are sectors and individual businesses that will do very well out of the current economic environment. It is often in the most challenging of times that innovation occurs and opportunities arise. Keep your ears, eyes and mind open for what might be possible, either as a business owner or employee.
And finally, some advice for those of you who do have emergency savings and a safe and secure income. Please don’t stop spending if you don’t have to. I always advocate for conscious spending that aligns with our values and now is a good opportunity to check-in with where your money is going. Are you spending with businesses that are supporting causes or groups that are important to you? Are you donating to charities that you believe in and need your support? If you are not feeling the financial impacts of COVID-19 then the world economy needs you more than ever right now. Every transaction counts.
I really hope this helps you to lessen the potential financial impacts of COVID-19. If you have any specific questions you want to be answered, please leave a comment below or contact me via my social channels. I’d love to hear from you.