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Coronavirus stress: Protecting your finances during COVID-19
Gulf News
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8 months ago
#coronavirus
#money
#covid19
UAE-based financial expert shares tips on how to manage your money during the coronavirus pandemic
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#coronavirus #money #COVID19
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Transcript
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00:00
We need to understand, first thing, the coronavirus has changed many people's financial circumstances
00:17
very quickly, ranging from job losses to pay cuts.
00:22
The overall employment scenario has become extremely gloomy.
00:26
There are people who are trying to go the extra mile, trying to save and stop themselves
00:32
from spending on the unnecessary things.
00:36
So I feel I would recommend that the most primary requirement is, you know, that how
00:41
you should protect yourself from the uncertain times and manage your finances effectively
00:48
is first to estimate your entire income in hand, and then the possible expenses, right,
00:56
the likely expenditure, in order to ascertain the overall saving situation.
01:02
After this, the next step should be to involve yourself further, look into the spending,
01:07
what you're doing, and then you segregate it from the ones which are essential from
01:11
the ones which are not essential.
01:17
Having an emergency fund is just a step to ride the recession wave.
01:22
There are some steps.
01:23
It includes, you know, savings every month by default, parking the same amount of money
01:29
in an interest-bearing account, making use of the cashback credit card, making use of
01:34
your discount offers.
01:36
It is really good to make use of your discount offers.
01:41
Also, if there are any tax benefits, any tax refunds, any stimulus checks that you have
01:47
received, that should straightaway go to your savings account.
01:50
Savings, it is something which everybody should follow religiously.
01:55
It's a principle.
01:56
It should be rigorously followed.
01:57
Whether you have got an increased variable pay, still you should save.
02:02
You should save all the time.
02:03
So for those people who still have not built up their emergency funds, this is the time.
02:11
Please start building your emergency funds.
02:19
Preparing to save at a time when one has lost his or her job, it's a very difficult scenario.
02:25
It's very challenging.
02:27
Ordinarily, the expenses like rent takes 40 to 50 percent of your expenditure.
02:33
Next, it is followed by school fees of children and then expenses like utilities and food.
02:41
So to start with, I think during tough times, I would recommend everyone look to shift from
02:48
a higher rent-paying neighborhood to one which has lower rents.
02:54
That would be a major contributor to your additional savings.
02:57
For school fees, there could be waivers being provided from schools and educational organizations
03:02
if the need arises.
03:04
As far as other non-essential needs are concerned, like your dining out, shopping, I think it
03:10
should be strictly curtailed.
03:13
Desperate times call for desperate measures.
03:15
So I think these suggestions can be helpful.
03:24
Financial health is also important.
03:25
Apart from your physical health, financial health is also really important.
03:30
Improving financial health during coronavirus crisis completely depends upon the availability
03:36
of your savings and emergency funds, which we discussed previously.
03:40
For an individual who has not started this process, the need of the hour is to start
03:44
it right away.
03:45
I think a fund or an account should be set up by everyone and every month, a fixed sum
03:53
of money should be allocated to that particular account.
03:56
In order to have a substantial corpus built over a long-term to medium-term scenario,
04:03
you can use that account and you can keep some money always, you can consistently keep
04:08
putting money in it.
04:09
The key to riding this downturn is consistency on both sides, savings and expenses.
04:16
You have to be consistently saving money and you have to consistently plan your expenses,
04:23
do not spend on unnecessary things.
04:25
So that kind of consistency we need.
04:27
We need to consistently save and at the same time, we need to consistently reduce our expenses also.
04:32
I feel there are these seven mistakes which you should really avoid.
04:42
One should not rely too much on the credit card for the daily expenses.
04:47
Also, I think living beyond the means of borrowing excess, that is not right.
04:55
Taking off more debts to pay off the existing liabilities, it is not the wise way to do.
05:01
I feel one should always pay off their existing loans.
05:05
It is no way to take more loan to pay their existing loans and then again have a debt
05:09
on your head.
05:10
So that is not recommended.
05:13
Again, one should properly plan and budget their expenses.
05:18
Not budgeting and simply spending without any plan, it is really harmful for your financial health.
05:25
Not having an emergency fund is another very common mistake one should not do.
05:30
One should always have an emergency fund and if you do not have it, start building
05:33
up right now.
05:36
You should always have a proper health insurance.
05:39
This is going to save a lot of money because God forbid tomorrow if you get sick, you should
05:45
have a proper health cover so that the expenses of the diagnosis, the expenses of that particular
05:55
cover can be compensated to you.
05:58
And then last, do not submit under peer pressure when you try to live a luxurious lifestyle
06:09
because this is a very common mistake which people do.
06:13
Submitting under peer pressure and spending too much on having a luxurious lifestyle.
06:19
Use the money which you have, have a lifestyle which you can afford, please do not go beyond that.
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