If you're a human being living on planet earth, you've probably heard of COVID-19, or as it is commonly referred to coronavirus (kuhrohnavaiiiiris for the Cardi B fans reading this). At the time of writing this article, at least a third of the world has imposed compulsory lock-downs, with the majority of citizens across Europe obliged to confinement as a result of government imposed restrictions.
Currently living in Madrid, I've witnessed first hand how the situation can change so rapidly and drastically within a short space of time. In the space of a week, we went from "acting with awareness" to estado de alarma (state of alarm) with a total lock-down. Other countries are following suite, such as France, the Netherlands and (very late) the UK. I'm hearing of job losses, lost income, instability and uncertainty, which is really awful.
Though we are already seeing some of the financial instability being brought about, I don't believe that it is too late to act, as there could well be further repercussions further down the line. Here is my advice to be financially prepared and ready to face the current and possible future impacts of this lock-down, and any other economic crisis.
#1 Emergency Fund - ESSENTIAL
If you haven't got one, start contributing money to it now, or allocate a portion of your savings to it. And if you have one, contribute more to it. I typically try to have an emergency fund of around 3 to 4 months of expenses in normal circumstances, which I am currently trying to bump up to 6 months as a precaution for the worst case scenario.
With the rapid evolution of the situation, (heaven forbid) there could be possible further job losses across certain business and sectors of the economy. With governments spending huge money to bail out workers and businesses, the debt accumulated may lead to borrowing or printing more money, which could drive up the prices of goods and services. We have already seen interest rate cuts in the US as well. By having an emergency fund, you have an interim solution and you buy yourself time to arrange a more longer term fix to your financial situation.
#2 Budget - ESSENTIAL
I stress that this is essential under normal circumstances, but even more than ever right now, it is absolutely essential to know what money is going in and out and when.
Once you understand and have carried out this first step, the next is to identify what are the essentials and necessities required for your survival (food, rent, mortgage, bills etc.), and what are the potential non-essentials that you can cut back on (e.g. subscriptions, shopping). This will help to take some of the financial pressure off, and you should end up with a little more money left over at the end of the month to contribute to that emergency fund mentioned just before.
The good news it that in confinement, some of your expenses will naturally disappear (e.g. restaurants and bars), so it makes the job slightly easier.
P.S. you can keep your Netflix or Playstation Online subscription if you want, we don't want to go completely crazy do we...
#3 Entrepreneurial Mindset - ESSENTIAL/OPTIONAL
A friend of mine is a personal trainer who runs Zumba classes on a regular basis. He obviously can't do this anymore, because his gym has been shut down. Nevertheless, he has demonstrated commitment to his clients and to his profession by live streaming Zumba classes over Instagram 4 times a week. That's entrepreneurship folks.
If you are in a similar situation to my friend, the digital world is your best friend right now, and you need to start thinking about things like this. Are you still able to provide your services and charge for them from your usual place of work? If not, how can you still provide your services from home and generate income? If you can't generate income, how can you stay connected to your client base and show them that you are still thinking about them and that you value their support? Whether you can or can't generate income in this moment, this is a critical time for your business, and your actions could determine it's survival or long term prosperity.
On the other hand, you may be employed but unable to work due to the lock-down. You can also leverage the digital world. Do you have any expertise that is valuable right now (that you are allowed to share of course)? Do you have a business idea that you've always wanted to explore, or a hobby that you wanted to make money from? Now is the time! Amidst the negativity and seriousness of what we are all living right now, there are opportunities for those who are daring. The reality of your situation is what you decide to make of it.
#4 Generosity - BONUS
It's great when you you have the good fortune of an emergency fund, a well thought-out budget and an income from still being able to work. Sadly, it may not be the case for some of your neighbours, friends or family.
We can and we will get through this unprecedented global crisis, but solidarity is key. If you are able to, why not put aside something to help out the people close to you who are in need.
How is the situation in your country? What advice would you give to get through financial instability and uncertainty? Leave us a comment with your thoughts!
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