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Sunday, July 25, 2021

The coronavirus and your personal finances

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Nimi Akinkugbe

We all crave a level of certainty and predictability in our lives; these clearly are uncertain times and it is easy to become anxious. We cannot be in control of everything that happens around us, but what we can and should do, is to be proactive about taking charge of our personal as well as our financial lives.

Health is wealth

The coronavirus has shown what an interdependent world we live in and in such a graphic way. We all have an individual responsibility to follow the clear guidelines set by the Ministry of Health. Wash hands frequently, keep a social distance and avoid crowds, practise self-isolation if necessary, and call the hotlines if you need help. These are critical measures that we do have some control over.

While you must stay informed, try not to be overwhelmed by all that you hear including the fake news. Keep abreast of the evolving situation as it affects us all directly. To break the cycle of this deadly virus, each one of us has a role to play. We must be disciplined and considerate.

Here are a few tips regarding your personal finances:

Cut back on your spending

During times of crisis such as this, we simply need to cut back on spending and be frugal and disciplined. This is where good old budgeting comes into play. Track your expenses and prune down those indulgencies for now. Develop a strict spending plan or budget for essentials so that you are accountable for all your spending.

Do you have an emergency fund? 

An emergency fund provides you with a cushion during emergency situations. Job security will be affected as some companies may have to cut salaries, reduce work hours or lay off staff due to falling demand as people stay away from public places.

Financial experts recommend having a financial safety net of six to twelve months’ worth of basic living expenses. Ask yourself; how would you cope if you lost a significant chunk or all of your monthly income? Could you live off your savings for 6 months? For many people this will sound absurd but just start by saving enough to cover one month’s living expenses and then build up from there bit by bit.  Having some funds to fall back on gives one a sense of security and some peace of mind.

Don’t panic buy

Panicking and taking drastic action without careful thought will only make your situation worse. Keep in mind that this crisis is affecting everyone and not only you. This is not the time to stock up on things you don’t need; it only creates false scarcity and increases your costs even further in an environment of high inflation. Of course, there are some essentials you do need but not to last a year!

Don’t panic sell

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