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How to adapt your finances to the coronavirus pandemic

The coronavirus pandemic is certainly a serious threat to physical, mental, and financial health on a personal and international scale. With no end in sight, how can you best adapt your personal finance and investing strategies to the coronavirus pandemic? If you’ve been worried about how to adapt to the “new normal”, keep reading — we have some tips for you.  

Adjust your budget

Almost everyone’s financial situation and day-to-day activities have significantly changed as a result of the coronavirus pandemic. First things first, take an honest look at your financial situation. It’s normal that this might be anxiety-provoking, but if you aren’t accurate in this step, none of your future planning will serve you.

To keep your financial fitness in check during the coronavirus pandemic, get clear about your debts, spending, and all of your necessary expenses.

Implement a spending plan

During non-crisis times, using a 50-20-30 budget plan can help folks balance their spending on essentials, long-term financial goals, and all the other stuff that adds a little pizazz to life. According to this plan, 50% of your budget should go to everything you need for basic survival, 20% towards savings, investing, and paying off debt, and 30% for spending on hobbies and treats.

This budget plan might serve as a good foundation, but during the coronavirus pandemic you may find that you need to tweak the percentages — perhaps you can shave off essential spending because you’re not going out as much, or perhaps you need to cut back on pleasure spending to adjust to job changes.

Whatever you decide, create a budget that makes sense for you and stick to it. 

Budgeting for the new normal

As you start budgeting, take into account the changes you’ll have to make to adjust to the new normal of the coronavirus pandemic. Perhaps you don’t need to spend money on office lunches anymore, but you’ll now need to stock up on face masks, sanitizer, and cleaning supplies as recommended by the World Health Organization and the Center for Disease Control.

Also, don’t forget to take a look at your grocery budget —  you might need to add on delivery costs, for example. Budgeting for essentials wisely is key to helping you survive the coronavirus financially. 

Save what you’re saving

Some lucky folks may have a unique opportunity to save during the coronavirus pandemic. While you might need to spend on new expenses (masks, grocery delivery, etc.), you may find that you’re saving in other areas of your budget.

For example, you probably aren’t spending as much on going out, transportation, or eating out. Don’t spend that extra money — instead, squirrel it away into your emergency fund. 

Re-evaluate your financial goals

Are you paying a mortgage or student loans? What about credit card debt? How hefty is your emergency fund?

The coronavirus pandemic has required us to step back and reevaluate everything, and your financial goals should be no exception. 

  • Loans: Check in to see if your government has frozen mortgage obligations, home loans, and student loans. Some countries are even finding ways to help folks deal with consumer credit card debt in the face of the coronavirus pandemic. These debt forgiveness programs and adjustments to the terms of loans can help you plan your spending. 
  • Emergency fund: Perhaps now more than ever, bulking up your emergency fund is important. It’s uncertain for how long the coronavirus pandemic will go on and how it will affect economies around the world. Take steps to increase your emergency fund to prepare yourself for possible job changes, illness, or whatever else may be on the way.

Review your investing strategies

The stock market has been erratic since the coronavirus pandemic began. To maintain your financial fitness, it might be necessary to adjust your investing strategies.

  • Be honest about your tolerance for investing risk 一 When you determine your risk tolerance, consider the timeline of your goals, time horizon, investment goals, income, and other factors. Whatever your situation is, be honest about it so that you can make the best financial decisions for yourself during the stock market ups and downs to come. 
  • Diversify your investments for long-term gains 一 While almost all securities have been affected for better or for worse during the coronavirus pandemic, basic investing principles are still valid and some types of investments continue to be more stable over the long-term than others. Diversifying your portfolio can help protect you from short-term fluctuations and maximize your long-term returns after the stock market recovers. Consider integrating exchange-traded funds, mutual funds, and other investment opportunities into your current investment strategy.

Adapting our personal finance and investment strategies to the current challenges of the coronavirus pandemic is key to maximizing our wellbeing. Adjusting your budget, re-evaluating your financial goals, and reviewing your investment strategies to adapt to our current reality can help you make the most of these tough times.

For more ideas on how to survive the coronavirus pandemic financially, how to behave during a stock market crash, and other money-saving tips, review the rest of the Academy education library. 

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