The pandemic has wreaked havoc along its path, from the countless deaths, economic recessions, and unemployment. Families had to adjust their budget amid the pandemic regardless of their financial status. According to the World Bank, 40% of families in the Philippines had to reduce their food intake since the pandemic began.
However, things are slowly getting back to normal as the vaccines are being administered. The stock markets have recovered, and job gains are being reported. That said, you need post-pandemic financial planning.
This is because accounting for every coin that enters the account is vital to protect your savings and investments. Below we’ll discuss how to establish financial freedom for you and your family.
5 Steps Post-Pandemic Financial Planning procedure
Now that the vaccine rollout is being ramped up, you need to be prepared as things are getting back to normal. Here are five steps to follow for your financial planning Post-Covid-19.
Review your finances
Evaluating your financial position is the first step toward recovery Post-Covid. Therefore, analyze your finances to see the damage to your investments and savings. Is there a dent left on them? If yes, what’s the percentage, and how can you adjust your finances to cover the gap?
The next step is checking your current income. How much is coming in? What are the changes in the income stream? Are they sustainable or not?
Now that you have answered all these questions, begin to make adjustments. This might affect your lifestyle, but it’s worth it. Stick to what you need rather than what you desire or want. And make the necessary changes in your current expenditure to utilize every coin.
Check your insurance
Having insurance cover is the best thing for you and your family. That is something most families have learned the hard way amid the pandemic. For this reason, we recommend going through your insurance policies to find out what they offer. Read between the line to understand the policies in detail that guarantee you are covered comprehensively. Plus, you can protect your beneficiaries regardless of the situation.
Hence take up the health and life insurance policies as they’ll protect your family. Furthermore, there are insurance firms that come with investment policies you can inject capital. This increases your income stream in the long run.
Though you’ll have to be smart about it due to extra premiums. If you can’t afford it, seek a plan that would fit your financial position. Your insurer is always ready to listen and work something out.
Develop a budget and spending plan
Now that you have reviewed your insurance policy and finances, it’s time to draft a budget. This Starts with your monthly household expenses. What are the bills you need to cover and the necessities to be bought? It would help if you drafted a list in the process.
You could use the free budgeting apps to draft the list and then go through it. And by doing so, you eliminate things you don’t need and adjust the budget accordingly. Considering the inflation rate is at 4.5%, in the Philippines you’ll need to tweak your budget for a smooth transition.
Establish an emergency fund
We refer to this as a safety net if things don’t work out for you financially. The net is meant to hold your head above the water for about six months or more until you get another source of income.
However, the case was different when the pandemic began; very few had set aside an emergency fund. Those who didn’t depended on the government stimulus package thanks to the Bayanihan Act.
Unfortunately, not all Filipinos benefited from the program and had to find other means of survival. This is a wake-up call to establish an emergency fund for you and your loved ones. You could begin by saving at least 10 percent of your income. The savings should be sent to your high-interest savings accounts. And if you don’t have the account open, it will add extra income from the interest accrued over the years.
Seek for COVID-19 stimulus packages
Amid the pandemic, when things seemed to be hopeless, the Philippine government stepped in. Apart from the Bayanihan Act coming into place, the parliament approved a 420-billion-peso ($8.7 billion) pandemic relief bill.
The budget is meant to revive the economy post-Covid, fund business, and offer aid to low-income families. Therefore, take advantage of this and apply for the funds. The cash will help you take care of your family and even start a business.
We must admit, the post-pandemic recovery is going to be hard. But that shouldn’t discourage you since we’ve been through worse and still emerged victorious. That said, you need to make the necessary changes when it comes to your finances. Invest what you can and save the rest. You could opt for the 50, 30, 20 rule.
Fifty percent goes to your bills and monthly expenditure, whereas the 20 and 30 go to your retirement and savings, respectively. This helps to secure your future and protect yourself during a rainy day. But before you get to this rule, you need to follow the five steps towards financial freedom.