LifeStyle Finance in times of crisis

Finance in times of crisis

-

- Advertisment -Finance in times of crisis


We must be smart with our financial resources. Change your plans and focus your priorities based on these recommendations.

The word crisis in Chinese is made up of two characters: one, which means risk, and the other, which represents opportunity. This phrase connects us with the country where the turbulence we are experiencing originates.

It is natural to be anxious about the current situation, as it is an event that will cause a recession and, consequently, will generate uncertainty in various aspects of our lives, including the financial issue. The crisis can harm us in different ways, in income, expenses, debts or investments, which negatively affects our pocketbook or lifestyle.

In these cases it is better to be prepared, avoid getting carried away by emotions and not lose sight of long-term financial goals. We must understand that the adjustments we make will be temporary and that, with discipline, we will once again be able to regain our stability.

If your income decreases

The income factor will be one of the most affected. Many people have a variable component, either because they are independent professionals, entrepreneurs or because our pay is linked to jobs that it is not possible to do. So, in these cases, the healthiest thing is to reduce non-priority expenses, with this we will manage not to let our savings decrease or get into debt. Another option to seek extraordinary financial support is to approach your Afore to make an unemployment withdrawal, this amount can help you to face extraordinary expenses.

How to adjust expenses

It is important to point out that, at all times, the level of these must be consistent with our income, that is, we should never pay more than we earn or try to finance current expenses through credit cards. Now, in times of crisis, it is even more necessary to do an exercise that allows us to adjust to the new reality.

READ  3 quick and easy sprout recipes to make at home

The first step is to make an exhaustive list of all expenses in as much detail as possible, from that morning coffee to parking payments or tips. The second is to group them by category (food, home, education, entertainment) and rank them. It is likely that if we have children, a necessary expense is to cover their education, but there are others, such as meals in restaurants or at home, shopping for clothes or beauty treatments, whose frequency can be spaced or substituted. The third step is to make an austerity plan.

READ  Personality according to your sleeping posture, meaning
(Photo: Getty Images)

In many cases it can be hard to completely cut the non-priority ones we are used to, but we can look for cheaper substitutes or homemade solutions. This exercise will also help us assess whether we really need to shop for coffee or food out rather than at home, or reconsider whether I need to add a pair of shoes to my wardrobe just because there was an online sale.

Finance in times of crisis

If our situation is a little more serious –although it is not recommended- we can lower expenses in life insurance, auto or medical expenses by temporarily reducing the insured sum, increasing the deductible or reducing contributions to our savings or pension plans. This is not a cancellation, but a temporary adjustment.

Finally, it is key to monitor our expenses week by week and month by month to ensure that we stick to the plan. This is an exercise that can be monotonous, but as soon as we see the benefit it generates, they will surely implement it in a very simple way and, they can even set the goal of spending even less than what is established and that money will be saved for a trip.

READ  What is your sun sign and how does it impact your astrological personality

Another relevant issue to avoid altering our goal is not to let anxiety dominate us, leading us to make ‘panic purchases’, purchasing face masks, disinfectants, medicines, cleaning supplies or pantry in irrational quantities. In summary, the recommendation is to be prudent and disciplined, it is not about limiting ourselves to the extent that this affects our mood.

Go shopping
(Photo: Getty Images)

And what do I do with my debts?

Although the ideal is not to acquire debts in these moments of uncertainty, the reality is that many times we have debts from bank cards or credits that were acquired prior to the crisis.

In credit, it is necessary to know how much they charge us in interest and commissions (including annual fee) to ensure that the plastic we have is the most convenient. Most banks offer options for you to transfer your balance to their institution.

And of course, there are two critical tips in the use of the cards: do not increase the balance of the card and always make a payment higher than the minimum required, in order to reduce the amount of the debt. In the event that you have another type of credit, such as payroll, car or mortgage, it may be recommended that you approach your financial institutions to renegotiate the rate or term. Whatever the type of credit you have, it is important that you do not stop paying it so as not to affect your credit history, because in the future they could deny you financing.

READ  A resilient Christmas - Vanidades

Investments and savings

There is an excess of information on social networks that can become alarmist or fake news, which could alter your objectivity when making savings and investment decisions, so make sure that the source of information is reliable.

READ  Masculinity in 2020

At this time it is foreseeable that you will find in your savings, investment or Afore accounts a reduction in the balance of your account statement, this is normal in long-term investments. Instead of being alarmed and making hasty determinations, I recommend you approach a financial advisor, because on the contrary, it may be a good time to build a long-term wealth.

Finance in times of crisis

It is advisable to have a contingency fund that allows you to cover three months of current expenses. If you don’t have it, now is the time. This situation will last for months and even if this time you have not been affected, no one is assured of stability in the medium term.

Lessons and opportunities

It is difficult to forecast the duration of this recession, but despite the efforts made by governments and central banks around the world, it is estimated that the recovery will be tangible in a horizon of 12 to 18 months. A crisis of this magnitude can help us realize the things we really need, as well as make us aware that it is necessary to save for the future and have a fund that allows us to be prepared for unexpected situations.

Tip

Make all your payments with a debit card, in this way you will have better control and will not get into debt. The account statements will allow you to detect where the money is going. It is common that when we pay in cash we lose sight of various expenses.

By: Ana Lorrabaquio, finance expert
Commercial Director of Distributors and Banks at Principal Investment Funds. Founding member of the Women in Finance Association. Master in Business Economics from ITESM, and 19 years of experience in financial markets.

LEAVE A REPLY

Please enter your comment!
Please enter your name here
READ  The best spas in Mexico and the services they offer

Latest news

Athlete’s foot: home remedies and how to prevent it from forming

Athlete's foot or foot fungus (Tinea pedis) is a fungal infection that usually originates and develops between the...

SERP (Search Engine Results Page): what is it?

SERP or Search Engine Results Page refers to the page that is displayed on a screen following a...

The OCU destroys Volkswagen: compensation of 3000 euros for the “dieselgate”

It has been no less than five years since the Organization of Consumers and Users (OCU) filed the...

5 ways the coronavirus is changing romantic dating

This is not the best time to think about dating someone. Photo: Alex Plavevski / EFE Now that the World...
- Advertisement -Finance in times of crisisFinance in times of crisis

This was the story between Jenni Rivera, Chiquis and Esteban Loaiza

The rumors of a love triangle between mother, husband and daughter unleashed a great scandal in their time The...

Delicious and crunchy croquettes. Enjoy its variety!

It is one of the favorite foods in Latin America and a national treasure...

Check this

What techniques exist to delay premature ejaculation?

Premature ejaculation has different causes; from insecurity,...

benefits of female orgasm and how to achieve it

Virtually all of us seek good physical and mental...

6 distractions that prevent us from enjoying sex

STDs can be a very common and powerful...
- Advertisement -Finance in times of crisisFinance in times of crisis

You might also likeRELATED
Recommended to you