One of the most often used words that has emerged in the last few weeks as part of everyday conversations is the word “unprecedented”. But really, is there a better word to describe the highly unusual times we are living in today?
While your attention is mainly and correctly focused on staying healthy and playing your part in flattening the Covid-19 curve, we’re going to take this opportunity to step away from that and help you manage your finances better in these unique times. Of course we recognise that some of you will have been affected more than others in terms of your job or income levels. Also, some of you will have been affected by the volatility and fall in stock markets in the last few weeks. But at least some of these tips should help you emerge from this crisis in as strong financial shape as can be achieved by you.
Review all your spending
The one silver lining about the lockdown is that most people are spending less money! Take this opportunity to review your spending – by that we mean everything. This is particularly important if your income has reduced. For a period of a month (or better still, two months), keep a log of every single euro that you spend.
Create a budget
Following your spending review, now is the time to get out your red pen! Where can savings be made in the future? Home entertainment packages, phone costs and energy bills are obvious places to start. Look also at what is being spent on takeaways, treats and alcohol – can these be reduced? Plan to avoid picking up where you left off with regard to impulse purchases when this is all over.
Tap into your emergency fund
Many of our clients have heeded our advice to, where possible, build up a cash nest egg as an emergency fund. If your income has reduced, now is the time to tap into that fund. This is preferable to selling investments in a depressed market – these were put in place with longer timeframes in mind so stick to the plan with these where possible.
If you can save – save!
Lots of people have not been materially affected by the lockdown. While you may be working from home, your income may be unaffected, and your spending has probably reduced. Now is the time to save more money, both for short term emergencies and to keep saving money into your pension plan.
Review the big items
If you have been affected income wise by the current crisis and don’t have a back-up fund, now is the time to take action on the big expenditure items. Check out your entitlements with regard to income support. Then see what is available to you in relation to rent supplement or apply to your lender to see if you can avail of a break with your mortgage if necessary. Look critically at all areas of major expenditure such as your car and even your health & other insurances – however we strongly suggest you talk to the insurer before just cancelling any payments. They may have solutions and/or flexible payment options available to help you through a short term cashflow issue.
Oh, and one other tip – feel free to pick up the phone to us. We are very experienced in issues relating to personal finances. Maybe we can help you, or even just offer an experienced 2nd opinion on some actions you are considering. We would be delighted to help.