These are not normal times. During crisis times like these, uncertainty looms large. Your financial situation is not the same, there have been layoffs, reduced hours or wages, stay at home orders, or increased medical expenses. It is important to take stock of where you are and make a plan to ensure financial success now and in the future.
Here are six key steps to help you manage your money during and after a pandemic:
- Analyze Your Available Resources
This crisis is like no other because for the first time humanity has come together and offered to help other humans stay healthy, both physically, emotionally, and financially. Many organizations are offering support to those impacted by the coronavirus. Knowing where to go for help, what to ask, and how to document your situation is key to successfully managing your finances and recovering once the crisis is over.
Start with any savings you may have put aside for emergencies then move on to community resources, like the ones below in Kenya to help you bridge the temporary but may become permanent income gaps:
Unemployment support, tax breaks, deferred payment plans for bills and loans, emergency benefits for the elderly, and vulnerable population (managed by the Ministry of Labor and Ministry of Devolution). Many banks and financial institutions including NGOs like UNHCR and Red Cross have set aside funds to assist consumers impacted by the coronavirus. A few schools are providing free meals for children at the school. Contact your local office to find out what is available for you.
- Create a Priority-Based Spending Plan
Once you’ve exhaustively identified the resources that you have and those that you qualify for, evaluate your budget, and create a priority-based spending plan. Consider all sources of available income and make a realistic list of your expected monthly expenses, prioritizing the “must-haves.”
These are things like rent or mortgage, food, utilities, insurance, transportation, and medication. Then, do the math. If your adjusted income adds up to less than your total monthly expenses, anything that is not a priority will need to be deferred as much as possible until the crisis is over and your financial situation changes.
If you don’t have a budget, now is a good time to put one together. If you’re facing a significant reduction in income due to the COVID-19 pandemic, then track your expenses carefully and build an emergency budget. If you already have a budget, consider reviewing it to see if you can reduce your expenses further. Take advantage of staying home for all this time and implement a no-spend challenge to help yourself save on discretionary expenses.
- Contact Your Creditors
In Kenya, many banks and financial institutions have set aside funds to assist distressed borrowers impacted by the coronavirus. The best time to talk to your financial institution is before things get out of hand. Whether it’s the mortgage, personal loan or car loan, the sooner you reach out, the better.
You may feel nervous talking to your bank, keep in mind that a lot of people need help right now, and many banks, credit unions, and lenders are working to support you. They’ll appreciate your proactivity.
There are some programs already in place to help stop evictions and foreclosures, so whether you are a renter or homeowner, contact your landlord or mortgage servicer right away to ask for help. The same goes for providers of car, student and personal loans, including credit cards. Creditors might offer reduced payments and fees, deferred payments through forbearance, or other hardship plans.
When you talk with your financiers, take notes. Write down:
- The date and time of your call
- The name of the representative you spoke with
- What you were offered
- How information will be reported to the credit bureaus
- The plan you ultimately agreed on
Once you agree on a plan, put together a letter summarizing your discussion and mail it to the creditor. Then, monitor your monthly statements to be sure you are receiving the assistance you discussed.
- Stay Safe and Be Aware of Scams
During such an emergency as Covid19, scammers are already trying to take advantage of the situation to defraud others. With so many individuals anxious about the state of their health and finances, many are susceptible to frauds around COVID-19. Be wary of any unsolicited emails, phone calls, or other communications, especially ones that request donations or sensitive information. Do not give out any of your personal information to unfamiliar individuals or businesses, and don’t fall victim to text message scams that ask you to get your money by clicking on a link. When in doubt, contact a company or the government directly by looking up their contact information yourself.
- Recover Strong
Once you are back on your feet, revisit your monthly budget and commit to regular savings to build or rebuild your emergency fund. Start gradually and set a goal to save Ksh1,000 a month and then keep saving until you have three months of your living expenses put away to handle future emergencies. Click here to join other savers at Finmat Sacco.
If you have debt, consider implementing a rapid repayment plan to pay it down or consider talking with a credit counselor to see if a debt management plan is right for you.
- Reach Out for Help If You Need It
If you’re feeling overwhelmed or anxious with what’s going on, counselors and other support professionals are available for appointments over the phone or online and can help you work through feelings of anxiety, panic, or depression. You don’t have to suffer alone, so reach out if you need to.
And please remember, these are unprecedented times, and although you may feel alone, everyone is affected by the current pandemic. Take steps to safeguard your physical, emotional, and financial health, and reach out if you need assistance.