If you are like most people, you were likely affected by the global coronavirus disease 2019 (COVID-19) pandemic directly through infection or indirectly through the disastrous impact it has wreaked on the economy.
But a new year brings new opportunities and if you are looking to turn a new leaf financially in 2021, you are far from alone. In fact, a white paper released by AdSpark, Inc., a portfolio company under Globe Telecom’s 917Ventures last year, showed that consumption of Personal Finances as a topic grew by 800% from January 2020 to the end of March 2020 when most Filipinos were required to stay at home.
This was supported by the Global Web Index which tells in numbers how people foresee the impact of the situation on their personal finances. Of the Filipinos surveyed, 65% believed that the COVID-19 pandemic will have a big impact on their personal finances while 15.7% said the effect could be greater.
No doubt that number is far larger now that a full year has gone by. Yet, as awful as it had been, there is much 2020 could teach about the importance of being financially secure, especially now in a drastically different world.
Save whatever you can and build an emergency fund
Everyone from the billionaire tycoons to their hardworking employees were caught unaware by the pandemic. This has resulted in millions of lost jobs and lost income. And while naturally the worst affected had been those already poor and vulnerable, everyone has felt the effects that COVID-19 has had on the economy.
Being prepared for such events and setbacks is the main purpose of an emergency fund. An emergency fund is a stash of money set aside to cover the unexpected financial surprises that may come your way. Such events could be an unexpected car trouble, a bad illness, or other sudden expenses. Having an emergency fund is like having a safety net that you can rely on to save yourself the stress of financial instability or going into debt.
Most financial experts will recommend an emergency fund of about three to six months’ worth of expenses, put into an easily accessible deposit account. You should try to save up this amount even if you have any outstanding debt, budgeting wherever necessary. The peace of mind brought by having an emergency fund will make all the scrimping worth it.
Naturally, you should not touch this fund unless there is an emergency, or else it defeats the purpose.
Learn to use technology to your advantage
Many people will struggle with saving, especially in troubled times like these. Most banks nowadays have digital platforms where you can do your banking online. If you have never tried using such platforms before, now is the time to try.
Having an easily accessible way to check your finances wherever you are can be a great motivator towards spending responsibly. You can also check with your bank if they have features like automatic bills payments for your recurring bills, or even if they can automatically invest part of your income towards retirement funds or life insurance.
Learn all you can about how digital technology can help you achieve your financial goals. Download free apps that can track your spending habits or can help you create a budget.
Check your lifestyle and make some cuts
As widespread as it was, the pandemic has changed everyone’s daily lives the world over. For many, it has been a massive lifestyle change. In an instant, there was no more travel to look forward to, remote work began to become mainstream, and eating out in restaurants became ordering delivery and dining in at home.
Examine how the pandemic has affected you and your spending habits. Maybe you stopped checking in for a morning coffee at your favorite cafe. Maybe you don’t order from restaurants as much because you can cook meals at home now. Whatever the changes may be, ask yourself if anything of value was lost. If you are satisfied with your life even with all the lifestyle cuts, then why not take them out of your budget altogether?
They say the best investment you can ever make is investing in yourself. If you want 2021 to be the year you start on your journey towards financial security, then it is a good idea to invest in your financial education.
You don’t need to enroll in any classes or buy any books (though they help!). Resources about financial education is all over the internet, from Investopedia to podcasts to your own bank’s website. Being financially educated means changing your mind-set to learn and understand money and all the ways it can help you improve your life. — Bjorn Biel M. Beltran