How to be financially prepared amid the Covid-19 outbreak

With the ongoing outbreak of Covid-19, people have been forced to think twice before stepping out of their homes into public spaces. Seeing that the death toll of the coronavirus has officially surpassed that of the previous SARS pandemic in 2003, it should be everyone’s responsibility to make conscious decisions and take the necessary precautions to protect ourselves, our loved ones,
our communities and countries as a whole. That said, it is no surprise that times like these have the potential to hit us really hard financially as well, especially if we are not prepared for it.

The reality is that outbreaks such as Covid-19 may occur from time to time, with little to no warning at all. As a result, the global economy could face significant challenges.

While we are making the conscious decision to take precautions to protect our health right now, how many people have had the foresight to make the same conscious decisions to ensure that their financial health is in order to face economically challenging times?

Every financial decision right now needs to be made carefully. People are facing tough times and will continue to do so over the coming months, and there is not much that they can do about it until the pandemic starts to abate and normalcy is restored. But how can you help keep your situation from getting any worse?

BE FRUGAL
It goes without saying that now is the right time to keep your expenses at the minimum and conserve the bank balance for as long as needed. Make calculations and plan ahead of time. But in order for you to do that, you need to start understanding where you are spending money. What categories are you spending on? Make a full list including your utilities, food, travel, etc. Make it a habit to actually understand where your money is going, then decide what is a need and what is a want – keep the needs as these are required, but do not treat yourself to all your wants.

BUILD A SAFETY NET
If you do not already have a rainy-day safety net, focus on building one. Having three to six months worth of expenses in an easy access account is the most sensible thing to do. Another factor that should be part of anyone’s financial planning is signing up for an income protection plan. Several firms offer policies that ensure the holder’s family has something to fall back upon if something unfortunate happens.

BE FLEXIBLE
Have you kept money aside for retirement and promised not to touch it? Well, this is the time to trade off some long-term goals for the unexpected short-term hiccups. If you are facing a loss of income and have to access that money, do it. Dipping into that saving is better than borrowing, selling something cheap, or allowing credit card debt to accumulate.

UPSKILL YOURSELF
Constant upskilling is the new normal for anyone hoping to stay relevant in an increasingly mechanised world. During crises, industries will realise that new operating modules have emerged – and
that they are fully digital. Artificial intelligence (AI) and robotics is already revolutionising many industries. Traditional methodologies could change, and hence, what you do today might not be relevant tomorrow. This is the time to be more diversified and focus on building your digital capabilities to survive.

Economic downturns are normal, and expected, as they are part of regular market cycles. Up until this pandemic, we experienced over a decade of market growth, so a slowdown was bound to
happen. That does not mean that we just sit around and wait for something bad to happen, but it does mean that we should stay calm when markets are cooling off.

And always remind yourself – this is a global storm, but it will eventually pass.

Jayesh Patel is the head of Liv. digital bank, Emirates NBD