Finance,  News

Desperate Decisions – 5 Tips for Making Sound Financial Choices During The COVID-19 Pandemic

Coronavirus Pandemic Man

The COVID-19 pandemic of 2019 and 2020 caused financial insecurity for millions of people around the world. All of a sudden, many people found themselves with a dramatically reduced income, or temporarily none at all. It’s easy to go into panic mode immediately, but keeping a sound mind will equate to sound decision-making. Here’s what you need to do if the coronavirus has turned your life upside down.

Short-Term Loans  

With a reduced income during a period of business closures, many people’s first thoughts have been to hammer their credit cards. The problem is, sky-high interest rates can make this debt beyond challenging to pay off. Many others then consider payday loans, but these can be even more devastating for your finances. Fortunately, there are several alternatives to payday loans that are designed to tide you over, not push you under.

Consider borrowing from reputable non-profit lenders who can top up your income while still making sure you can afford to pay it back. You can then enjoy financial security with a game plan for how to make repayments once the worst has passed.

Create a Budget

The COVID-19 pandemic has impacted many families’ finances considerably. Previously, you may not have thought twice about where your money was going, but you may find yourself watching every penny.

If your income has been impacted, create a budget. Work out what you must spend versus what you can do without. You can then work out how much you realistically need to earn to get by during this tricky time.

Talk to Your Payees

During a time of uncertainty, the first thing many people worry about is not being able to pay their bills. However, it’s crucial to remember that it’s not in your payees’ best interests to lose you as a customer. While you may not have available funds to pay the full amount you owe a company, you may be able to come to some kind of arrangement.

Get in touch with your bank regarding your mortgage repayments, and don’t be shy about requesting assistance from your utility provider. You may be surprised at how much compassion they have for your situation.

Stick to the Necessities 

When you’re not quite sure what your income is likely to be for the coming months, it’s imperative to stick to the necessities while shopping. Do you really need that new handbag right now? Is it necessary to shop for name-brand goods when more affordable options are available? Being conservative with your spending can mean you’ve got more of a buffer in your bank account if times get tough.

Stay Calm

You might feel like your entire world is crumbling around you, and that your financial situation couldn’t get any worse. While it’s true that life is tough for many people right now, a sound mind can be of great benefit – not just for you but for everyone with whom you interact.

Consider a technique called mindfulness. This practice promotes cognitive flexibility, reduced stress, and less emotional reactivity. At the very least, it can mentally prepare you for any hard financial decisions you might need to make.

Most people have not had a great start to 2020, with a pandemic sweeping the world and leaving chaos in its wake. While businesses and families are finding it incredibly tough right now, it’s crucial to make sound financial decisions. By doing so, you can be in a far better position to start afresh once the storm finally passes.

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Zara Jones is a valued contributor to various CosmoBC's blogs.

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