Recovering from the Economic Impacts of Covid 19

June 3, 2020

The global pandemic has already had a significant impact on personal finances for families around the world. Though making any kind of prediction at this stage is difficult, even for the experts, a slow recovery is looking likely. With so many industries on the brink of collapse, the financial landscape as we know it has been transformed beyond all recognition. As the stock markets prepare to re-open for trading, borrowers around the world are starting to look to ways of recovering from the devastating economic impacts of Covid 19. Asteria have put together a few tips on how you can start building a plan to get your finances back on track.

Take Stock of Your Situation

If you have been unfortunate enough to lose your job or a significant portion of your income, you are not alone. The first step is to assess the situation honestly and identify areas that need immediate attention. If you are unable to pay for groceries or medical care, you will need to contact your local government for advice on any support you may be entitled to. Take a look at your outgoings and prioritise which ones are essential. Also take the time to work out when your income may increase again. This can be extremely difficult in the current circumstances, but things like contacting your place of work for information about when you are likely to return.

Be Practical and Realistic

Unfortunately, many industries will be forced to effectively close down or operate at a drastically reduced capacity for the foreseeable future. This means that those who were employed in sectors such as hospitality, entertainment or fitness may need to consider other forms of employment, even if it is just a temporary measure. This does not necessarily mean abandoning your existing career entirely as you may still be able to balance it with a second, part time job. Many professionals are turning to things like online fitness classes, restaurant quality delivery services and live streaming music events as a way of generating some income while the world works out the next move.

Learn to Save and Know When to Borrow

Though saving might feel like an impossible task in a climate like this, effective money management is absolutely essential if you want to lessen the impact of Covid 19 on your finances. Simple tricks like saving up a week’s worth of rent, bills and food payments means that you will have at least a small safety net, should you need it in the future. This might not be practical for everybody, especially those with significant existing debt. In this case, borrowing at the lowest rate of interest you can find is usually the best option, providing you are confident that you can pay off what you owe in the future. If you are in serious financial trouble, consider approaching a debt-based charity for advice. Help is available for those in need.

Economising and Making Do

Though many people associate the idea of making do or spending less with a feeling of self-denial and sacrifice, this does not always have to be the case. Saving money takes time and effort, which is why it can be such a difficult thing for so many people to do, but with the right approach, it’s possible to enjoy a moderately comfortable lifestyle without having to spend beyond your means. When it comes to making purchases, always take your time. Most debt is accrued as a result of reckless, impulsive spending. If you are shopping for a new laptop, consider buying second hand or refurbished instead. Instead of spending money on take away food, learn to prepare your own meals at home. Both of these things can require patience and organisation, but they are also likely to save you a lot of money.

Planning for the Future

At this point, making any kind of financial plan for your future might feel totally impossible but this is not the case. Governments around the world are currently trying to stabilize the economy with special measures and the general consensus seems to be that the world wants to get back to work. Social distancing and the risk of a second peak will almost certainly present significant challenges for business and individuals alike, but there is a growing sense of confidence that we will be able to recover from this. For now, planning just a few months ahead is often a good strategy. Setting budgets and earmarking funds for what you think you will need. You can always review your situation every month or so to make sure it is working for you. In uncertain times like this, flexibility and finding new ways to adapt are essential.

Try to Find Some Positives

Finding financial positives is tough at the moment, but things like spending less on transport and fuel costs, socialising and holidays mean that many people are making unexpected savings. Using the cash, you would have spent on things like household essentials or loan repayments is a sensible way to redirect your money at the moment. You may also find that you are spending less on things like clothes as you are going out a lot less. Similarly, those impulse buys such as coffee and snacks throughout the working day are likely to have been replaced by cheaper, home based alternatives. These might seem like pretty insignificant savings but over time, they can add up to more than you might expect.

Summary

Everybody’s situation is slightly different and the individual steps you will need to take in order to properly recover from the financial impact of Covid 19 will depend on you. Unless you are lucky enough to have a large amount of savings, the chances are that you will need to make significant sacrifices and do everything you can to curtail unnecessary spending until things stabilise a little. A combination of this kind of careful spending and proactive planning to increase your income as much as possible in the future is the best approach to take.