5 Crucial Finance Tips during Covid-19

The Covid-19 pandemic has been catastrophic for the world economy. Almost a year has passed and millions of people all over the world are still reeling from its effects on the stock exchange, forex market, employment and uncertainty.

The Investous team has compiled a list of 5 crucial finance tips to help our clients weather these trying times.

Trade Smart

Trade CFDs sentiment has been largely subdued but positive job numbers and certain positive investing indicators continue to buoy the market. Pay attention to the news and to economic data as it is released. Use the knowledge you gain to invest in sectors and companies that have turned this ordeal into opportunities to grow.

If you invest in international currency, monitor economic data from those countries. The exchange rate is closely tied to their national economic health. The trading professionals at Investous can help you understand the market better.

Create an Emergency Budget

A shockingly small percentage of US families are prepared for financial emergencies, and that statistic has been on full display during this crisis. Despite the doom and gloom that currently prevails, you can not only develop but grow your emergency budget. The 50-30-20 rule is an ideal way to start.

The first step is to create an accurate list of income and expenditure. Once you have a clear picture of your average overall expenses, strip them down to the essentials. This component includes food, utilities, rent and insurance payments. It should account for no more than 50% of your income.

The next category is ‘wants’, the smaller expenditures that include entertainment and dining. It should account for less than 30% of your income. Lastly but perhaps most importantly is the 20%, which is the minimum proportion of your income that should be saved and, preferably, invested.

Research Your Options

Far too many people are feeling the crunch from the prolonged glut in employment and growth. Fortunately, many government and private agencies have responded quickly and generously. The onus lies on you to discover the extent to which their general and Covid-specific programs can help you.

Firstly, address your expenses. Contact your lenders regarding repayments of outstanding debt. Most have created plans that provide relief to their clients and only require you to sign up. Speak to your landlord regarding rent and utilities provider to discuss other living expenses.

If you are eligible for government grants and additional relief payments, make sure to register and abide by all qualification conditions.

Avoid panic purchasing

One of the most distressing repercussions of the growing pandemic was the sight of empty store shelves. It was also one of the most unnecessary and avoidable. Despite the temporary shortage of certain items, the supply chain of essentials and even luxury items has not been adversely affected.

Now that sanity seems to have returned, take prudent steps to ensure that you only buy a reasonable quantity of items for your family. If you do intend to stockpile certain items, buy a few more than necessary on each shopping trip instead of a large quantity at once. If this includes perishables, make sure to continuously use old stock first so it does not go bad.

Perhaps the strongest argument against panic buying is the surge in expenses (and possibly credit card debt) that you will have to contend with. Save that money instead.

Separate Wants from Needs

This seems like one of the hardest steps for people to take but it is absolutely essential. If you have adopted the 50-30-20 guideline we touched on earlier, you will now have a clear idea of essential versus discretionary expenses. It is time to slash that non-essential component of your budget.

We strongly recommend that you eliminate all recurring subscriptions. This includes newspapers, magazines and periodicals unless they are essential to your employment (in which case, your employer should take up the slack). Literally all the news and information that they provide is available legally at no cost by other organizations.

This category also includes gym memberships and your film/theater/dining budget. These activities bring you in close social contact with many people while placing you in environments that simply cannot be effectively sanitized. Why spend money to take the risk?