Top Practices To Follow Right Now To Achieve Financial Independence Post COVID 19
Financial freedom removes dependence and the focus is on what you need and want in life. It helps secure your future and helps you gain stability in future years.
Financial planning is prudent given the deteriorating conditions across the globe. The spread of the Novel Coronavirus COVID 19 has hit the landscape of developing countries hard, as the cost of containing the virus has spiralled downwards to a global economic recession.
The economic slowdown will be far deeper and longer as a comparison to the 2008 financial crisis. Therefore, savings are important. It is also wise to drop predictions and act practically as we navigate through these tough times.
You can make wise moves to gain better financial control that will help stabilize your finances as we get homebound to flatten the curve of the pandemic. Listed below are the steps that we must implement right away to gain financial independence for ourselves post the end of COVID 19 pandemic.
- Prepare a budget – Our lifestyles have been narrowed down now to getting only the essentials for ourselves. This led to removing unwanted items from our list. We can take this as a great opportunity to think and to make it a pattern for the future as well. Differentiate between fixed and discretionary expenses. It will allow us to pick only the areas which are non-negotiable and cut down on all other additional stuff. Very soon you will discover, spending is way less than it used to be earlier.
- Boost Saving- To afford our necessities during events like this, you must boost emergency funds by reserving a pool of cash. Losing sight of the cash will pose serious financial issues. Don’t deny the possibility of losing the job. Conserve the bank balance as long as possible. Saving more money is more of a behavioural problem. It is more about mindset than about any action. It takes patience, time, discipline to develop these practices. Set up automated recurring transfers to set out a certain amount every time you get paid. You can take the help of several mobile apps to align your automation.
- Cut down expenditure – Keep the expenses to a minimum considering it as an emergency situation. Set aside six months of your expenses saved up. An emergency fund is a key to sail through turbulent times. Financial advisors are of the opinion if you have a less predictable income, you may need more than six months of your income saved up.
- Shun the debts – Don’t even borrow from friends and relatives. Stop using the credit card right away. Always pay full when you make payments. Don’t shy away from negotiating deals. It gives you an opportunity to save extra bucks. Take a deeper look at your debts and see where you stand. Use the “debt avalanche” or “debt snowball” method to get rid of those revolving loans.
In the avalanche method, you will have to list your debts from highest to lowest by interest rate. This will help to pay off the loan which has the highest interest rate.
The snowball method prioritizes your smallest debts first irrespective of the interest rate. When one after other small achievements are made, it will motivate you to keep treading the path.
Once the debt is paid down, you will have a focus on directing the money elsewhere.
- Increase Income From Other Sources – Tough times often calls for wage stagnation. To give a boost to income, changing jobs will work towards achieving independence. It may or may not work in your favour but negotiate for a pay increase with your current employer. At least, give it a try and take the initiative. They might agree. It is important to know your worth. Remain open to new opportunities and do something additional along with your current role. Plug your skills in the changed scenario to remain at the safer zone. Protect yourself from the layoffs happening around by upskilling yourself.
- Don’t Fall for the Gimmicks or Tricks- A lot of traps come into play during times of crisis promising to get you guaranteed and higher returns on your investments. Or buying those shares which are trading at lower rates. Do not pay heed to such gimmicks. Stay away from gambling and save as much as you can.
- Make Yourself Count – It’s time to roll up the sleeves and get things done. Make a difference by putting your efforts in finding out a solution to the problem, focussing energy on saving resources, increasing productivity, and in all possible practices that you can. This practice should not be limited to only during the crisis.
- Invest in Guaranteed Return Products – During times of uncertainty and market volatility, it is wise to invest and reap assured benefits on guaranteed return products. It will allow you to systematically invest year on year. Investing the money is important but equally important is to know how to go about it. Keep up with the latest developments to find offerings that cab earn you substantial guaranteed returns.
- Investing in Health Insurance Schemes – Safeguarding your family’s interests is crucial and works best as the perfect wealth protector against a medical emergency. This is a necessity and should not be cut down on.
- Liquidating Assets If Need Be – When the situation demands, assets that are not serving as a source of income can be liquidated. Your equity or fund holdings, gold, or a property bought for investment purposes can be liquidated. These possessions can be brought back when times will be good.
- Trade for some long term and some short-term goals. Setting goals is one of the best ways to take financial responsibility in your life. Take time to consider those goals and how much savings it will take to reach those goals. Without goals, you don’t know where you’re going and you can’t reach there. Take positive steps and create plans to meet those goals financially. When faced with a shortage of income, you can access those funds without borrowing, or selling something you hold dear to. Do not allow credit card bills to accumulate. It is best to customize spending categories and have well defined financial goals.
- A home is on the buying list for everyone but the spike in rates in normal situations turns the spirit of buyers down. However, this current situation can best be utilized for getting the dream home you have been eyeing for years. Investing in property is reliable and trusted to give you higher returns over the years.
According to Lending Tree’s latest survey of over 1,000 prospective homebuyers, this outbreak has motivated a greater percentage of people to purchase a home in the coming year. It may turn out to be a good investment with record-low mortgage rates of 67%, reduced home prices, being able to save a larger down payment due to reduced spending amid the pandemic.
Implementing the above-listed steps will put into the pedal of sticking on your budget even after this whole fiasco is over. Take this opportunity to look into your handling of finances closely. Preserve yourself and come out financially stronger. It will give you benefits that will last a lifetime.
Try keeping in mind, the current turbulence is temporary and the world tends to weather disruption and return to normal once again at some point. Find your footing right now and work towards being prepared for future ups and downs.
The unexpected and unprecedented times that we are facing right now is coupled with historically low mortgage rates is motivating 53% of homebuyers to purchase a home in the coming year. As per Lending Tree’s survey reports conducted