Whatever kind of 2020 you were planning back in January, it seems that it's safe to say it's turning out drastically different than what you had in mind.
Restrictions due to the corona virus are gradually being erased around the world. In some cases reinstated because the pandemic is far from over. On top of that we're now facing a recession. Unemployment is rising. Businesses are shutting down. Stocks are volatile. And sorry to give you more bad news the recession is just beginning.
Let's not forget to stay positive about it. Because I’ll try to give you some practical survival skills to get through these tough times and even thrive to come out even stronger than before in our careers, in our finances and in ourselves. Remember that the answer to tough times isn't to hang our heads in despair but to take action.
Gym membership, maybe lockdown taught you how well you can do your workouts at home and you can consider getting rid of that one too. Wheels out trips and vacations, sure you still need to treat yourself sometimes and your chances to do these probably have been limited in recent months but if you're suddenly able to do them with lockdown over don't go crazy. Check your spending and don't go overboard.
Usually a 50-30-20 split is recommended that means 50 percent on necessities like rent, mortgage, phone and internet, other utilities, groceries, medical bills and insurance you get the picture. 30 percent on wants like entertainment, hobbies, trips and vacations. And remaining 20 percent on savings and investments for tough times like the ones we are facing.
If possible switch the second and third figures and make it 20% for wants and push up the figure for savings and investments to 30% or even higher if you can. You're going to want to put these into an emergency fund.
Getting laid off for your work drying up in a recession the chances of this happening shoot up which is why you should have enough money in the bank to last you at least 3 months. If you're stuck without income and if possible 6 is better.
If you've done your budgeting you'll know how much you need for basic survival needs. Calculate what you need for these 3 months and keep saving until you've got that. If you can go on until you're covered for 6 months better still. Once you've got between 3 to 6 months of emergency funds, you can start putting the rest into investments which will help you thrive beyond the recession.
Making the minimum payments could get tricky and falling behind with these could mean problems that will snowball like increasing debts and a bad credit rating. So get rid of your debts now and you'll thank yourself later.
If you've got a number of debts list them according to their interest rates and first pay off the ones with the higher rates. If you've got a credit card there's a good chance that's your first priority to get rid of as their interest rates are sky high. And needless to say once you've gotten rid of your debt unless it's absolutely necessary don't take on any more.
If you have an excellent credit rating it may be possible to move credit card debt on to zero interest credit. Getting rid of your debt is the better course to take but if it's not possible at least look into your options.
Ideally you want to find something you've got a passion or a talent for. Something you used to do as a hobby could work. But now you're going to make money from it as a freelancer. Perhaps you've had this in mind for years but you've never taken that step. But now is the time.
If you've got a specialist skill in any area you could start making money straight away by giving tutoring lessons in it. In most cases you can do this over teleconferencing. As a longer-term project you could set up a blog or a YouTube channel that you might just be able to monetize later on. Just start searching and you'll be surprised with the possibilities you might find.
Thinking of working for a different organization then talk to people who already work there or if you set up a side hustle talk to freelancers who've done it themselves and to see if you can learn from them. Present yourself as somebody who's savvy, enthusiastic and willing to learn. That way, when they hear of an opportunity they'll be more likely to reach out to you.
Here's the thinking, isn't the stock market going to keep on falling or shouldn't I stop investing until stocks to hit rock bottom and then buy? Well, the expert advice is simple and that is keep investing as usual. Remember history shows us that every recession until now has been followed by a long-term upswing. The stock market recovers to the levels higher than ever before. It rewards people who carried on investing.
We all know that the biggest cause of this recession is the Corona Virus and hopefully we're all aware that it's still a big threat. Your ability to keep your job or develop a side hustles or upgrade your skills and basically be in control of your finances and career is definitely affected when you're not healthy or unable to work.
As we're all in this together, let's just remind ourselves that the more people ignoring the advice of health experts the more people think they're immune and hang out in crowded places because it's time to celebrate the end of lockdown then the worse this situation is going to get for all of us. So as long as the virus is a threat take the advice of those who know best for your own sake and for everybody else's.
Let's not forget to stay positive about it. Because I’ll try to give you some practical survival skills to get through these tough times and even thrive to come out even stronger than before in our careers, in our finances and in ourselves. Remember that the answer to tough times isn't to hang our heads in despair but to take action.
CUT UNNECESSARY SPENDING
To prepare for difficult times step one is to spend accordingly. That means keep your spending write down on things that aren't necessities. Subscriptions you don't use definitely get rid of them. Ones that you use but don't need have a good think about it.Gym membership, maybe lockdown taught you how well you can do your workouts at home and you can consider getting rid of that one too. Wheels out trips and vacations, sure you still need to treat yourself sometimes and your chances to do these probably have been limited in recent months but if you're suddenly able to do them with lockdown over don't go crazy. Check your spending and don't go overboard.
PREPARE A BUDGET
Making a budget and sticking to it is the cornerstone of getting your personal finances together. If you're not keeping track of what you're spending your money on you're probably throwing a lot of it away. So, record how much you're spending. Set yourself targets and try your best to stick to them.Usually a 50-30-20 split is recommended that means 50 percent on necessities like rent, mortgage, phone and internet, other utilities, groceries, medical bills and insurance you get the picture. 30 percent on wants like entertainment, hobbies, trips and vacations. And remaining 20 percent on savings and investments for tough times like the ones we are facing.
If possible switch the second and third figures and make it 20% for wants and push up the figure for savings and investments to 30% or even higher if you can. You're going to want to put these into an emergency fund.
SET UP AN EMERGENCY FUND
Having cash for emergencies is a basic of personal finance at the best of times. So in a recession it's a must. You never know when disaster is going to strike.Getting laid off for your work drying up in a recession the chances of this happening shoot up which is why you should have enough money in the bank to last you at least 3 months. If you're stuck without income and if possible 6 is better.
If you've done your budgeting you'll know how much you need for basic survival needs. Calculate what you need for these 3 months and keep saving until you've got that. If you can go on until you're covered for 6 months better still. Once you've got between 3 to 6 months of emergency funds, you can start putting the rest into investments which will help you thrive beyond the recession.
PAY OFF YOUR DEBTS
If you've got debts and you're able to get rid of them now this should be a priority. A few months down the line you could find yourself in a squeeze for money.Making the minimum payments could get tricky and falling behind with these could mean problems that will snowball like increasing debts and a bad credit rating. So get rid of your debts now and you'll thank yourself later.
If you've got a number of debts list them according to their interest rates and first pay off the ones with the higher rates. If you've got a credit card there's a good chance that's your first priority to get rid of as their interest rates are sky high. And needless to say once you've gotten rid of your debt unless it's absolutely necessary don't take on any more.
IF YOU CAN’T PAY OFF YOUR DEBT
Some lenders offer options like debt deferment or forbearance. Call your bank or lender and find out what options are available. But view this as a short-term strategy. Because that's what it is lenders may be kind to you for a while but before long they'll want their money back.If you have an excellent credit rating it may be possible to move credit card debt on to zero interest credit. Getting rid of your debt is the better course to take but if it's not possible at least look into your options.
SIDE HUSTLE
In a recession the benefits of doing this are double. First it'll get you a little extra income on top of your nine-to-five. Second if your nine-to-five is affected it'll give you a fallback. And the good news is it's never been easier to set up a side hustle.Ideally you want to find something you've got a passion or a talent for. Something you used to do as a hobby could work. But now you're going to make money from it as a freelancer. Perhaps you've had this in mind for years but you've never taken that step. But now is the time.
If you've got a specialist skill in any area you could start making money straight away by giving tutoring lessons in it. In most cases you can do this over teleconferencing. As a longer-term project you could set up a blog or a YouTube channel that you might just be able to monetize later on. Just start searching and you'll be surprised with the possibilities you might find.
CREATE YOUR NETWORK
This is a productive way of putting your time to use if you've been made redundant or working hours reduced even if you have it. It's still a great thing to do thinking of moving to a different line of work. Get talking to people in that field about how to get in.Thinking of working for a different organization then talk to people who already work there or if you set up a side hustle talk to freelancers who've done it themselves and to see if you can learn from them. Present yourself as somebody who's savvy, enthusiastic and willing to learn. That way, when they hear of an opportunity they'll be more likely to reach out to you.
DO INVESTMENT
If you regularly put money into long-term investments you might be hesitating right now. It's natural to think that in a recession investing is the last thing you should be doing.Here's the thinking, isn't the stock market going to keep on falling or shouldn't I stop investing until stocks to hit rock bottom and then buy? Well, the expert advice is simple and that is keep investing as usual. Remember history shows us that every recession until now has been followed by a long-term upswing. The stock market recovers to the levels higher than ever before. It rewards people who carried on investing.
STAY HEALTHY AND SAFE
It should be kind of obvious but from what we've seen recently on the news and from what's going on around us, a lot of people still need it pointed out.We all know that the biggest cause of this recession is the Corona Virus and hopefully we're all aware that it's still a big threat. Your ability to keep your job or develop a side hustles or upgrade your skills and basically be in control of your finances and career is definitely affected when you're not healthy or unable to work.
As we're all in this together, let's just remind ourselves that the more people ignoring the advice of health experts the more people think they're immune and hang out in crowded places because it's time to celebrate the end of lockdown then the worse this situation is going to get for all of us. So as long as the virus is a threat take the advice of those who know best for your own sake and for everybody else's.