I have no idea how much COVID-19 virus has affected you personally. But one thing is for sure, we are all on the same boat wondering how we can recover from this. You may be the person who has prepared or was caught off-guard yet regardless, we all have one common goal and that is to come out stronger and better.
Financially speaking, we are all affected. Some jobs were laid off. The global economy is in recession. People are panic buying due to a lockdown. Some were not covered by a health insurance plan. Some emergency funds were insufficient. Businesses ceased to operate temporarily. And most people were not really prepared to brace themselves for this crisis. We may not know how long this will last but I want to encourage you that just like any other crisis we’ve faced in the past, this will also come to an end.
And because of this dilemma, you may be wondering how can we really bounce back from a financial crisis. I will share with you some ways we can all start doing while in a lockdown.
Here are some 8 ways for us to recover from a financial setback
Having a clear goal sets the direction on where we want be in life. Whether that is a short-term or long-term goal, this helps us remind the vision that we have for ourselves. Without vision, people perish. Without vision, there will be no progress and growth to take place. Take this time to reassess your plans and write it down. Make it clear and simple so you will be mindful to stay on the course no matter what situation brings you.
The basic step in having a healthy cashflow is to realign your expenses with your lifestyle. This may be a time to reset your budget plan and assess what needs to be improved. You may follow a 50/30/20 or 60/20/20 rule (fixed expense, savings and investment, enjoyment expense) Whichever works well for you, execute that plan. Upon assessing, there may be some expenses that you need to cut-off. It may feel uncomfortable at first yet it’s going to be worth the sacrifice especially if the goal is to achieve a financial freedom for life. Take advantage of this idle time in fixing your spending and saving habit by allocating them properly.
Now if you’ve found out that your cashflow is unhealthy and cutting off some expenses are no longer feasible, maybe the best solution is to find a way to earn extra income while at home. Take this time to improve yourself. Whether as a freelance graphic artist, a writer, an English tutor or virtual assistant, explore your passion and hone that skill. If you’re really driven to change your situation, start with yourself. You never know, having an extra income could be a way for you to save and invest more.
If you have a debt and could not afford to settle the lumpsum amount immediately, instead of running away face that outstanding balance head-on and strategically plan on how will you be able to pay it off completely. Set a timeline to keep you on track. If you are a credit card user, assess yourself and decide if it’s wiser for you to cut it. Or if you still see it as a necessity, just train yourself to be disciplined in using the credit card to avoid unnecessary transaction. You have to commit to yourself not to make the same mistake again. Because in times of crisis, lesser debt or not having at all lifts up your financial burden.
If doctors give medication for sick patients, financial advisors give sound recommendation for unhealthy cashflow. If you are not sure how to allocate and organize your finances properly, go to them and seek their advice. They don’t just sell insurance, they also help you by giving a concrete plan on how you can achieve your financial goals for the future. Especially now that our agenda is to recover from a financial crisis, getting mentors, coaches and advisors will be a great help for you to keep yourselves aware of your plan so you can rise above from this setback.
Now if you already have a financial advisor, ask them how you can build up your emergency fund and have a contingency plan for life crisis. Having an income protection fund is also a way for you to prepare yourself from SAD events (sickness, accidents and death) One of the important realizations at this time is that emergency fund is essential because that will sustain us in uncertain days. Safety net or protection fund will help our family from getting poor in the long run just in case an unfortunate event happens. And so utilize this opportunity to talk about this with your advisor during the quarantine to help you prepare for the future.
Studies show that having a great support system helps people accomplish the plans they have set for themselves. I know you don’t want the same financial crisis to happen to your loved ones and that is why encouraging them to do the same will allow you to add value to their lives. At some point, you need people who will remind you of your goals and help you stick with it no matter what. If that’s your family, share with them the importance of being educated about financial literacy and together help each other succeed in the area of finances.
I know this chunks of information might overwhelm you right now. And so I don’t recommend you to do everything all at once. Prioritize which comes first then little by little during the lockdown, slowly make those baby steps. This is not an overnight thing, it will be a process. I guarantee you that the road to getting yourself out of the financial crisis is not going to be easy. You’ll still make mistakes. But one thing I want you to remember is that from every mistake, learn from it and decide to become better each day. Mindset is everything. If you decide in your mind to stick to your plan and become patient in seeing yourself progress, you’ll surely succeed from this.
I hope this pieces of advice will help you plan your way out of this financial setback. Remember that it always starts with a small step. Take that step so you can also help others step up from this. If this adds value to you, share it with people and create a community that helps one another in rising up from this crisis. This too shall pass. Let’s claim our victory!