How to be financially prepared for the next wave of coronavirus
Over the last month we’ve seen many countries start to ease lockdown restrictions. But have countries been too quick to start easing these restrictions? It appears so.
Several countries have started to see a resurgence in cases, with some countries seeing an even bigger spike than the first. With the premature easing of lockdown restrictions in the U.K., the risk of a second wave of Covid-19 is looking increasingly more likely.
From what we’ve seen, it appears one of the biggest impacts Covid-19 has had on our lives is the financial strain it’s caused. When you combine not having a regular income coming in from a job and a lack of savings, it has made it a real struggle for many. Another wave could prove to be an even bigger financial disaster for all of us.
If you weren’t prepared financially for the first wave then that’s understandable and you could be forgiven, but if you’re not prepared for a second wave then things could get ugly for you. It’s critical that you begin to prepare.
Don’t rely on the government again
When the infection first reached the UK the government was quick to step in and help people financially through various schemes. However, if another wave occurs we cannot expect the same level of treatment.
The UK government has already spent £190bn to support public services, businesses and individuals, according to the Treasury. In order to provide this financial support they have had to take on a huge amount of debt. Unfortunately, there is only so much that the government can borrow. If they end up borrowing too much, then they risk not being able to pay back lenders.
The furlough schemes which were covering 80% of our wages are no longer likely to be granted to us again. Any money we do receive will most likely be a lot less than the first time around. We may potentially not receive anything at all.
How can we financially prepare for the next wave?
Be sure to have an emergency fund
When many businesses such as restaurants, bars and shops were forced to shut it meant for many of us our spending decreased, and for some of us we had extra savings left over each month. These extra savings can be put into an emergency fund, if you didn’t already have one.
You should aim to be able to cover three to six months of living expenses. If you’re concerned about losing your job, then you should aim for the six month mark.
Building an emergency fund could prove invaluable if your income is affected during a second wave of Covid-19. Not only will it help cover your expenses, but it will keep you from turning to credit and going into debt.
Stick to a budget
Make sure you are tracking all your spending and allocate where your money needs to go each month. This will help prioritise your essential spending from your non essential and allow you to cut back and save money.
Creating a specific budget for emergency situations such as a potential second wave of Covid-19 is a sensible idea. This will allow you to decide how your money needs to be spent, in case of an unexpected reduction in household income.
Now’s the time to start saving on outgoings and avoiding unnecessary purchases. Put the money you save each month away into savings or an emergency fund.
Just remember, the feeling you get from financial peace of mind will trump the short term burst of happiness you might get from splurging on a new designer bag or fancy dinners.
Save to invest
One of the biggest takeaways we can take from Covid-19 is the importance of obtaining financial independence. Unfortunately in today’s environment it’s not just enough to save money, in order to grow our wealth we have to invest.
Interest rates are at an all time low and savings accounts won’t help grow your money anymore. In order to build our wealth we must invest in income producing assets. This way we don’t become dependent on a single source income such as a job or relying on the government to support us.
Alternative investment solutions such as automated AI trading, P2P lending and index funds are all relatively low risk investment solutions that will not only help grow your savings, but also build and grow your wealth, and ultimately help you become financially independent.
Stay optimistic, but prepare for harder times
Although another wave of Covid-19 could easily hit us again, no one fully knows what the outcome will be. Scientists are working their best to develop a cure to prevent the disease. But until that happens, we have to be fully prepared for another wave. It’s time to get our finances in order and make sure that we’re financially prepared for the next wave of Covid-19.