Personal Finance Concerns During COVID-19

While a lot of people thought we may be done with COVID-19, it seems to have come back and it might not being going away for awhile! Given the economic uncertainties, it is very important to keep a close eye on your personal finances and to continue to assess your current financial situation. Below are a few common areas for financial concerns that may have already come up or could come up in the near future.

Missed or late payments: A missed payment can become a major issue for you. Not only will this create late charges, but it could also cause you to default on your loan or obligation if you don’t pay it back. To avoid these issues, you should opt for the auto-pay method. If you do not have the funds to make your payment, call your bank or lender immediately before the payment is due. You can renegotiate the terms of your payment as well as increase the tenure of your loan.

Increase in debt: During a time of crisis, personal debts usually increase. Credit card debt, auto loans, student loans, and mortgages, among others, have high interest rates and it becomes difficult to repay them. A lot of times people borrow more to help pay for everyday living expenses and it makes it all the more difficult to afford your debt payments. You should watch the amount of debt you have and incur during this time of uncertainty.

Lack of emergency funds: An emergency fund is critical to have during a time of crisis. Unfortunately the emergency fun can only last for so long and depending on the length of a crisis, the emergency fund may deplete. This crisis may be a good example as no one is really sure how long this crisis will last. I would recommend to continually re-assess your budget and really forecast how long your emergency fund can last. If you don’t think it will last as long as you need it to, focus your attention on the most critical aspects of your budget.

Cash flow issues: Cash flow is very important during a time of crisis. Any shortage in cash flow leads to the failure of monthly budgets and becomes a concern. Also if you lose your job, the cash coming in may deplete entirely. This can lead to financial stress as well as personal stress. Make sure you continually monitor your cash flow each week to ensure you are staying cash flow positive.

Stay positive: In all likelihood, your financial problems can be solved with the right mindset. You will likely face some significant challenges during this crisis, but you have to stay positive to pull through. I can’t say how long this crisis will last, but we have survived worse, and am confident we will survive this one. Staying positive could bring positive opportunities.

Does anyone have any additional personal finance concerns? Please feel free to share in the comments section.