Coronavirus stress: Protecting your finances during COVID-19

Gulf News

UAE-based financial expert shares tips on how to manage your money during the coronavirus pandemic  See more videos at https://gulfnews.com/videos  Read more Gulf News stories here: https://bit.ly/2HLJ2km  #coronavirus #money #COVID19

Transcript

00:00We need to understand, first thing, the coronavirus has changed many people's financial circumstances

00:17very quickly, ranging from job losses to pay cuts.

00:22The overall employment scenario has become extremely gloomy.

00:26There are people who are trying to go the extra mile, trying to save and stop themselves

00:32from spending on the unnecessary things.

00:36So I feel I would recommend that the most primary requirement is, you know, that how

00:41you should protect yourself from the uncertain times and manage your finances effectively

00:48is first to estimate your entire income in hand, and then the possible expenses, right,

00:56the likely expenditure, in order to ascertain the overall saving situation.

01:02After this, the next step should be to involve yourself further, look into the spending,

01:07what you're doing, and then you segregate it from the ones which are essential from

01:11the ones which are not essential.

01:17Having an emergency fund is just a step to ride the recession wave.

01:22There are some steps.

01:23It includes, you know, savings every month by default, parking the same amount of money

01:29in an interest-bearing account, making use of the cashback credit card, making use of

01:34your discount offers.

01:36It is really good to make use of your discount offers.

01:41Also, if there are any tax benefits, any tax refunds, any stimulus checks that you have

01:47received, that should straightaway go to your savings account.

01:50Savings, it is something which everybody should follow religiously.

01:55It's a principle.

01:56It should be rigorously followed.

01:57Whether you have got an increased variable pay, still you should save.

02:02You should save all the time.

02:03So for those people who still have not built up their emergency funds, this is the time.

02:11Please start building your emergency funds.

02:19Preparing to save at a time when one has lost his or her job, it's a very difficult scenario.

02:25It's very challenging.

02:27Ordinarily, the expenses like rent takes 40 to 50 percent of your expenditure.

02:33Next, it is followed by school fees of children and then expenses like utilities and food.

02:41So to start with, I think during tough times, I would recommend everyone look to shift from

02:48a higher rent-paying neighborhood to one which has lower rents.

02:54That would be a major contributor to your additional savings.

02:57For school fees, there could be waivers being provided from schools and educational organizations

03:02if the need arises.

03:04As far as other non-essential needs are concerned, like your dining out, shopping, I think it

03:10should be strictly curtailed.

03:13Desperate times call for desperate measures.

03:15So I think these suggestions can be helpful.

03:24Financial health is also important.

03:25Apart from your physical health, financial health is also really important.

03:30Improving financial health during coronavirus crisis completely depends upon the availability

03:36of your savings and emergency funds, which we discussed previously.

03:40For an individual who has not started this process, the need of the hour is to start

03:44it right away.

03:45I think a fund or an account should be set up by everyone and every month, a fixed sum

03:53of money should be allocated to that particular account.

03:56In order to have a substantial corpus built over a long-term to medium-term scenario,

04:03you can use that account and you can keep some money always, you can consistently keep

04:08putting money in it.

04:09The key to riding this downturn is consistency on both sides, savings and expenses.

04:16You have to be consistently saving money and you have to consistently plan your expenses,

04:23do not spend on unnecessary things.

04:25So that kind of consistency we need.

04:27We need to consistently save and at the same time, we need to consistently reduce our expenses also.

04:32I feel there are these seven mistakes which you should really avoid.

04:42One should not rely too much on the credit card for the daily expenses.

04:47Also, I think living beyond the means of borrowing excess, that is not right.

04:55Taking off more debts to pay off the existing liabilities, it is not the wise way to do.

05:01I feel one should always pay off their existing loans.

05:05It is no way to take more loan to pay their existing loans and then again have a debt

05:09on your head.

05:10So that is not recommended.

05:13Again, one should properly plan and budget their expenses.

05:18Not budgeting and simply spending without any plan, it is really harmful for your financial health.

05:25Not having an emergency fund is another very common mistake one should not do.

05:30One should always have an emergency fund and if you do not have it, start building

05:33up right now.

05:36You should always have a proper health insurance.

05:39This is going to save a lot of money because God forbid tomorrow if you get sick, you should

05:45have a proper health cover so that the expenses of the diagnosis, the expenses of that particular

05:55cover can be compensated to you.

05:58And then last, do not submit under peer pressure when you try to live a luxurious lifestyle

06:09because this is a very common mistake which people do.

06:13Submitting under peer pressure and spending too much on having a luxurious lifestyle.

06:19Use the money which you have, have a lifestyle which you can afford, please do not go beyond that.

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