The whole world is experiencing a difficult time which probably no one ever imagined. We are scared of going out of our homes. The kids are homeschooling, many people are working from home if feasible, the health care workers and doctors are working day and night, and people are worried about whether or not they’ll be able to get necessary grocery items at stores. Many people have been laid off, some others are facing pay cuts, and many others are worried about how long they’ll get their paycheck. In such a situation, it is quite evident that you’ll worry about your financial future.
It is the need of the time that you try to manage your finances better and don’t commit any mistakes.
Here are a few financial mistakes that you shouldn’t commit during this COVID-19 emergency.
Not modifying your budget
One of the greatest mistakes people make is following the same budget even in times of emergency. The financial experts say that we need to assess our budget from time and time and make modifications when required.
So, in this emergency situation, when people are losing their jobs, it is the need of the time to save as much as you can to prepare yourself for the future. Even if you do not have the fear of losing your job or a pay cut, it is better that you stop unnecessary expenses and save more.
Plan a separate budget for this emergency situation.
A CNBC news article states that many people have started shopping online as a substitute for visiting the stores. The sales data has revealed that initially, people started stockpiling goods but now they’ve shifted their focus to buying books, games, and other entertainment products to adjust themselves to this quarantine lifestyle. As many are getting bored at home, they are even online shopping for various things like garments and other lifestyle products.
But this is a mistake. As I already mentioned, it is the time when you should stop overspending and try to save as much as you can. Doing so, you’ll be prepared even if you face some financial emergency.
If you’re getting bored at home, focus on developing some hobbies. You can also do some online jobs, which you like to do, and earn dollars.
Overestimating your emergency fund
Do not overspend thinking that you have an emergency fund and it’ll take care if you experience a pay cut or a job loss.
Why would you use your emergency fund if you can sustain yourself without touching it?
You should try to save about 5-6 months of expenses in your emergency fund. So, if you’re falling short, try to save the required amount in your emergency fund next time around.
Trying to time the markets
It is a tendency that we start selling our stocks when the price falls, even a bit. It is true that no one knows what will be the aftereffects of COVID-19. However, the experts suggest that it is a mistake to panic and sell the stocks you have. Have patience and do not sell your stocks now. Leave your investment portfolio as it is. The market will definitely recover. The market recovered even after the economic crisis of 2009. So, it may take time, but the market will likely recover.
Stop checking your portfolio every day and consider adding to your portfolio and what you perceive to be a low rather than divest in stocks at what you perceive to be highs.
Overusing credit cards
You might have to use your credit cards for purchasing but do your best to limit it to an amount that you’ll be able to repay in full at every billing cycle. In the present situation, do not use your credit cards for something that is not a necessity. It is not a good idea to incur debt at this time.
Why will you waste your hard-earned dollars on making interest payments?
However, if you already have debt and are struggling to pay it off, you can enroll in a debt consolidation program. When you enroll, the professionals will guide you to repay your existing debts in full.
If you can’t repay your debts in full, then try to settle your debts by negotiating with your creditors on your own or take the help of a settlement program.
Another thing, be careful of not withdrawing cash by using your credit card. You will have to pay an unnecessary charge if you do that.
And, use your reward points wisely when you’re shopping online. Do not let your points expire. Use them for your financial benefit.
Above all, stay healthy and avoid stress. Staying mentally and physically healthy will help you overcome this situation.
Let’s look after ourselves and make our financial future a healthy one!
Good Nelly is a financial writer who lives in Milwaukee, Wisconsin. She has started her financial journey long ago. Good Nelly has been associated with Debt Consolidation Care for a long time. Through her writings, she has helped people overcome their debt problems and has solved personal finance related queries. She has also written for some other websites and blogs. You can follow her Twitter profile.