The coronavirus pandemic has been the worst human experts catastrophe in centuries and thrown the global economy off the track with bleak chances of recovery as the world plunges into recession. Amidst the worldwide pandemic, every individual is concerned about how to manage personal finance. Everyone wants to decide the best course of action, whether making credit card payments or mortgage payments or deferring it in the wake of uncertain economic scenarios or deciding where to park the money safely during the tumultuous times.
The experts at Arlington Capital Management suggest their clients stick to the basics and a sound financial plan.
Create an emergency fund advises the experts at Arlington Capital Management
The pandemic has taught us that even a small sum can be of immense help when the going is tough, as many companies have not been able to pay salaries, and millions have lost their jobs. The target should be to have enough cash for meeting the living expenses until the crisis blows over. Put aside a sum equivalent to your six months expenses and create an emergency fund. To generate a surplus, you can even think about reducing your contributions to retirement funds and instead put the money in the emergency fund. Once the crisis is over, you can start the retirement savings again. Remember that every dollar you save is equal to earning it and practice austerity by focusing on needs instead of wants.
Do not defer mortgage payments and credit card payments
You may be facing financial hardships during the COVID-19 crisis. Try to make regular mortgage payments despite the moratorium offered by the bank or government. Prioritize mortgage payment over other expenses as every installment paid reduces the interest payable. Deferring the payment will only multiply the interest but be a burden for you as you end up paying more.
Pay credit card dues on time and avoid carrying over bills because the interest rates are too high and will strike you during the crisis when you face uncertainty about income.
Top-up health cover taking a new policy
The coronavirus pandemic has highlighted the need for having adequate health cover as well as life cover. Term insurance covers that are highly affordable is a must as you can choose the highest life cover by paying a low premium. Review your existing health insurance plan and top it up or take a new policy if you feel that the coverage is inadequate. With the threat of COVID-19 looming large and in the absence of any treatment or vaccine, as well as the possibility of a resurgence of the infection later, it is only prudent to protect your wealth by taking proper health cover that takes care of any health emergency.
Wrapping things up
With proper health and life cover, you can plan your finances better by thinking about long term investments as markets will take time to regain its vitality.