Today we are dealing with an unprecedented global health crisis. But we also face an economic pandemic. How do you survive economic uncertainty?
Find Your Grit
The only way to survive economic uncertainty is with something called grit—the determination to reach your goal, no matter what happens.
Coined by Dr. Angela Duckworth grit is defined as, “working strenuously toward challenges, maintaining effort and interest over years despite failures, adversity, and plateaus in progress.”
For you and your money, grit means sticking to your financial goals, no matter what. It means not letting fear of economic uncertainty cause you to make financial decisions that will upend your financial security.
Stay in Touch with the News
There are many new legislative and regulatory initiatives coming out of the government. This article will not touch on those programs because the landscape is changing daily. I encourage you to stay in touch with whatever channels you trust to learn about the most updated economic relief programs.
The purpose of this article is to provide tips to help you survive economic uncertainty, whether it be from the current coronavirus pandemic or something else that may develop in the future.
Here are 7 tips to Help you Survive Economic Uncertainty
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Don’t Panic
It’s normal to feel nervous right now, you are not alone. No one knows how long the current economic pandemic will last. But it is critical that your financial decisions be made from a place of calm, not fear. You need a rational mind to develop a strategy that is going to protect your money and financial goals.
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Revisit Your Budget
Obviously, for now, your budget is probably not going to reflect reality. Do you have less money coming in than planned? How about your expenses? Make some adjustments to your budget that will help you get through the current situation, keeping your focus on your long-term financial goals. You might need to tweak your budget every month for the short-term. The point is to keep your budget relevant.
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Look for Ways to Increase Income
The silver lining to the current economic pandemic is that there are new opportunities in the gig economy. The online learning market is exploding. Can you tutor? Do you have a skill or hobby that can be taught online? How are you as a public speaker? Many events are going online now and they need online speakers. Maybe you can take your knowledge and put it into a podcast. The retail market is in need of delivery persons.
There are always healthy ways to survive economic uncertainty. A calm mind will help you identify the best strategies for you.
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Reduce Unnecessary Expenses
This is good advice no matter what is going on in your life. But to survive economic uncertainty, you really have to get serious about cutting out the wasteful spending.
One advantage of the current situation is that most establishments and activities are closed and canceled. If you are one of those working from home, you are saving money on gasoline and/or public transportation. Take the money you would normally spend on these items and put it into savings. It will help you build up a small buffer to weather the days ahead.
Look for other ways to reduce expenses. Do you still have subscriptions you never use?
Be careful at the grocery store. Do you plan your meals ahead of time, so you know exactly what you need to purchase (or order) from the supermarket? If you want to stock up on certain perishable items, be sure you will consume them. Now is not the time to lose money on food that you have to throw away.
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Contact Your Lenders
As mentioned, there are several federal economic relief programs that seek to help borrowers, including student loans, mortgages and other types of loans. Local lending merchants may be offering relief too.
No matter the reasons, if your financial circumstances change, the first thing you want to do is let your lenders know. Missing payments or defaulting on loans can negatively impact your credit score long after the economic pandemic is over. Don’t wait to fall behind in payments. Be progressive.
Be honest about your situation. Ask if you can make partial payments or receive a pause in your payment schedule. Negotiate new terms if possible or at least a temporary reduction of interest fees. And take advantage of all government-sponsored relief programs.
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Prioritize to Survive Economic Uncertainty
Remember, whatever economic upheaval you are going through, it won’t last forever. But the choices you make now could impact your financial life for a long time.
If you did not manage to build an emergency savings account, then you will most likely not be able to cover all your bills each month. Obviously, you need groceries and if you are a renter, you need to make your rent payment.
When forced to choose which bills to pay, think in terms of your credit score. Remember, your credit score impacts every facet of your life. Therefore, within all means possible, you want to protect it.
Focus first on those payments that get reported to the credit reporting agencies, such as credit cards.
As with your loans, falling behind on credit card payments is going to tank your credit score. Call your credit card issuer, ask for an extension of time to make your payments, or a brief pause in payments. Ask them to waive the interest portion of your payment until the situation improves.
In times of an economic pandemic, your credit card issuers are going to be amenable to working out a payment plan. They would rather receive something than nothing, and you can protect your credit score.
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Ease Your Cash Flow
If you have excellent credit right now and can afford to make the monthly payment, you might consider paying your monthly bills with your credit card. This will ease your cash-flow for a while. But only take this route if you are sure that you can at least make the minimum monthly payment.