Keeping your finances in check is tricky under any circumstances. Yet when it comes to a national crisis, it’s like dealing with the aftereffects of a hand grenade on your bank balance. The damage is particularly harmful due to the unpredictable nature of a large-scale crisis.
The coronavirus has perfectly illustrated the problems thrown up by a financial catastrophe. At one point, the United States was experiencing its longest economic expansion in history. Then within a matter of days, COVID-19 took hold of the world and wrecked the economy in the process.
Even if you are facing a grim financial situation due to a national, or even international, crisis, there are steps you can take to weather the storm.
Limit debt
In general, you should always attempt to eliminate your debt as soon as possible. The longer it lingers around, the longer you will have to pay unnecessary interest and fees. Plus once it’s gone, it supplies your budget with some much-needed breathing room.
This is important if a national crisis results in you losing your job. If you have excess debt to pay but no income to do so, you’ll only plunge further into financial misery.
Build a financial safety net
If your professional career is affected by a national crisis, you will be struggling to bring in any money – especially on a short-term basis. This is why a financial safety net, where you save up a pool of cash for any significant downturns, can be a lifesaver. It allows you to continue paying for the necessities while on the lookout for a new job.
For a guide, The Week details how to build a financial safety net.
Emergency cover
Due to how a national crisis can pounce at any time, there is no prior warning to build up a nest egg for a rainy day. If you suddenly find yourself in a financial emergency but have no safety net in place, there is still help available.
That help is provided in the form of small loans. A small loan is easy to apply for and can even be acquired by those with a lacklustre credit score. It’s a suitable solution to settle an upcoming bill when needed, so long as you’re in the right position to cover the repayment terms of the loan.
Cut down on expenses
When a crisis directly impacts your way of life, there is no time for frivolous spending. In fact, there’s no time to be splashing out on anything deemed unnecessary.
Take a look at your monthly expenses and decide what items can be eliminated. This could be a gym membership, subscription service, premium TV package, and so on – non-essential items which will help you save money each month.
Think about the long-term
It can be easy to descend into a panic when a financial bombshell strikes. However, it’s imperative that you take a step back and look at the big picture. By doing this, you can gain an overview of your finances, the current situation, and how to plan for it on a long-term basis.
Nobody knows when a national crisis will no longer be a crisis, but it’s necessary you strategize for every scenario.
Photo credit: Gerd Altmann
