Today, the world is facing a pandemic unlike any within the past 75 years, which has already caused a dramatic loss in millions and millions of human lives worldwide and unprecedented challenges on everyone’s lives as well as countries’ food systems, health systems, societal systems as well as economy. Many individuals have lost their financial supports and struggling to survive.
“When Covid-19 hit, people acknowledged the fact that money management is more important than they presume”
It doesn’t matter whether you are a fixed salary employee or a self-employed businessman, the truth is that we all have the same basic needs let apart the differences in our lifestyles and earning potentials, we all will come into certain uncertainties, which will ultimately impact our finances. The crisis may be new to us, but the fact that a crisis affecting our finance is not.
Hence,……… It is time to rethink financial planning…
Financial management is “planning and rethinking every step you put forward” which requires some amount of determination.
Have you ever questioned yourself reasons behind your financial struggles?
Have you ever thought about controlling what you spend? have you ever planned to improve your financial position?
If you did not, now you have to. You need to have a contingency plan for your money management, control your spending, and improve your financial position. Most people do not plan to fail. But the thing is they fail to plan. You need to have set goals in order to do that. Henceforth, you need to be prepared to navigate through any challenges and work towards your set goals.
“If you take control of your finance today, then you won’t be a victim of them tomorrow”
-Emily G. Stroud-
You need to ask serious questions about yourself.
- What should I do if my income is Cut in Half?
- What should I do if a family member gets sick?
- What should I do, if the expenses go high and the earning will not be enough to cover?
- Have you ever forecast your expected income level against your expected spending for the upcoming period (week, month, quarter)?
- Have you ever planned for extra savings towards future contingent risks?
Then you need to take responsive actions. A contingency financial plan will cast away your fears and anxieties about thinking of what to do in a crisis like Covid-19.
Covid-19 has taught us that life itself is not certain. Life will present you with many vulnerable moments. That is where the Covid-19 has become a case study of promoting having a satisfactory emergency fund.
An emergency fund should be about three to four months of your monthly living expenses. Throughout the lockdown situation, we saw many businesses have struggled as well as there were several salary cuts. The question is, have you ever had an emergency fund. Did you ever plan for extra savings? This is not an overnight achievement. This is more of a long-time vision. The more you can save regularly, the better.
What if every time we say “if only I had more money”, we have a dollar? This will explain the importance of financial planning.
On the other hand, managing your debts is as important as keeping an emergency fund. Having debts, owing money may be stressful. But having easy debts with reliable interest rates can be identifying as a greater enabler to achieve your goals as well as build wealth.
Have you ever evaluated the sufficiency of the availability of extra funds (savings, fixed deposits, investments) in case of an unforeseen situation?
First and foremost, savings, fixed deposits, and investments will give you greater security. It will be a long-term nest egg against all the emergencies and the fallbacks you will be having in the future. It will provide you with control of your future and life. You will have financial confidence.
This is not necessarily to be a fixed deposit or an investment. It can be a property that will provide you a better cash flow return or it can provide you dividends with a shared portfolio. Even though many people think reaching this task is difficult, this indeed can achieve with the right number of strategies and financial disciplines.
“Financial planning is like Navigation. If you know where you are and where you want to go, navigation isn’t such a great problem. It’s when you don’t know the two points that it’s difficult”.
A crisis can bring wisdom. As such, Covid-19 has forced us to reposition as well as rethink our financial strategies. There is a saying that, tough times do not last but only the tough people will. In a time like this, let’s all be positive and optimistic and let’s face post covid world strongly and more sustainably using Covid-19 as a financial planning tool.
The contemporary valuable idea of using “Covid-19 as a Financial Tool” has been contributed by Mr. Pubudu Karunarathna (ACA | ACMA | MAAT | Ex PwC | Ex EY), The Head of Finance in Fintech Software Solutions (Pvt) Ltd. He contributed with the key pointers for this article drawing useful insight to the people.