2020 Apr 26
Salary cuts, moratoriums, layoffs and curfews, it is an understatement to say that we are passing some tough times folks! Life, as we knew it, has vanished from under our feet, with COVID-19 continuing to devastate the world. Put aside the enormous mental burden stemming from job security, fear of infection, missing out on a weekly dose of cheese kottu and whatnot, but our finances are slowly beginning to put us in a stranglehold, choking the life out of us.
Reel your clock back to one and a half years ago; COVID-19 was not even a distant reality where we had to live off on savings, pulling our hair thinking, “how the hell am I going to pay my auto loan installment?”.
‘Survival’ is the name of the game now, wake up guys! It’s no longer a zombie movie out of Hollywood, it’s just cold hard life now. Do you see that million-dollar question staring at us, “how do I manage my financials till I see the light at the end of the tunnel?” Here’s an action framework to meet the crisis in a smart manner.
Sit down with intention, get up with a plan
There is no way around it, believe me, I know, since I had my fair share of procrastination before I sat down to plan my finances. Let me tell you this, no amount of “managing your income” zoom meetings or “owning your financials” articles will make you manage your numbers until you realise that the bankruptcy threat is very real. “Nah! It’s not that hard, I can simply do it in my mind,” I kept convincing myself until I was a mess. I was clueless as my credit card, auto loan, and annex rent expenses got dumped on my head one after another; and there I was dumbfounded, wondering “blistering barnacles! Where the hell did all my money go?”
Design and execute a simple plan to track your expenses, prioritise and ration your income, explore whether you can defer your fixed costs and expedite cash inflows, repeat the cycle until you are out of the woods.
“No-frills” lifestyle to build a “rainy day fund”
It goes without saying that a simple lifestyle is imperative until the smoke clears. Anything that comes with an expense, you’ve got to ask yourself, can I live without this? It doesn’t kill us to halt once-a-week hangouts or opt-out from a membership fee. Plan to meet your basic needs before thinking of luxuries.
Since every cent will have a greater opportunity cost, who knows, our very lives might depend on it. Start slashing unnecessary perks, divert them to build an “emergency fund”, and make sure that you live to fight another day rather than going down with a bang!
Don’t shy away from help, be smart in seeking it
Make sure you actively seek help, check whether you’ve become eligible for a moratorium by the state on your credit card, personal loan, lease or any other form of payment due. Do not shy away from asking for a reduction of your rent from your landlord or from a professional body you owe a membership fee to. Do not let your pride get in the way of receiving that lifeline as you are going to need it badly. No one knows how long the COVID-19 pandemic will continue to last, so do not discount any form of help but accept it. If it comes to seeking financial help, negotiate the best “bailout deal” for you. Turn to your inner circle of parents and siblings, closest friends and work colleagues, or even check with your banker for an overdraft against your salary.
“Monetise” your skills, grow your side hustle
Lockdown throws you ample time to sit on. Sharpen your skills during this time to a level where others offer to pay to rent them. It doesn’t really matter whether it’s designing websites, composing software, or even poultry for that matter, as long as you can turn your skills into money.
List yourself on the hundreds of platforms offering you jobs as a freelancer. Call “shotgun” on the first opportunity that you stumble upon. Don’t dwell excessively on self-doubt, because the more you think, deeper you’ll drown in fear. Push yourself into the deep and start swimming!
Your net worth is your network!
Never underestimate the power of social and work relationships. True, they don’t really sound like money, but a solid contact you’ve made with genuine effort might give you an edge in grabbing your next career move. In the aftermath of COVID-19, it is inevitable that our economy will go into a shock. Rest assured there will be layoffs than ever before while hiring freezes. It will be a dog fight in the job market to get hired and to grab new opportunities. Invest in your relationships and build a network. It is a smart investment with high payoffs that would come in handy especially during times like this.
Master yourself in financial literacy; obtain knowledge and practise real-time
What you learn will help you become what you are, so choose what you learn and read carefully. An investment in knowledge pays the best return. Financial literacy is a must-have if you seek a life free of money worries. Anyone seeking financial freedom should have a solid grounding in the basics of personal finance and possess the skills and knowledge necessary to make informed decisions and take responsibility for their own financial well-being. And luckily, many resources for improving your financial knowledge are available for free – www.cfasrilanka.lk is one among them.
Some say the best form of defense is an offense. Likewise, this crisis will require us to step out of our comfort zone and try things slightly differently. Whether it’s building your start-up from scratch, finding your next job or protecting your current one, always remember that you control your life. And it’s up to you to decide whether you go down the path of recklessness and doom or fight your way through the road to glory!
Information derived with the assistance of Ravi Abeysuriya, CEO of Candor Asset Management
