For most of us Covid 19 is the first economic, financial and life threatening situation we have had to face, given that have not had to live through any of the notable world wars.
This challenge has hit extremely hard as the world in general was living in a place of some complacency.
I personally have found myself totally unprepared from a mental, financial and business standpoint and felt as if I had stepped onto an extremely steep, slippery surface unexpectedly, arms flailing about wildly as I desperately try to find my footing.
I am pleased to report that I have started to emerge from the “grief cycle” of losing my old life and slowly am looking forwards and upwards waiting to catch a glimpse of the rainbow evidencing this storm has passed. In this new outward focus I have started to see some silver linings around the grey clouds.
What are the silver linings?
The overriding silver lining is that there are opportunities in this.
For me, the universe is kicking my procrastinating financial butt and giving the following gifts:
- The opportunity to create new healthy money habits.
Despite all the work I continue to do on my finances I keep on finding that some of the core bad habits linked to some suboptimal money beliefs I have are still firmly rooted.
- The time to set up new money management systems.
The habits I have hanging around can only be permanently managed with effective, easy to apply systems.
- The ability to take control of my money.
I can take this opportunity to put myself in the driving seat towards my financial goals. A core component of being in control of my financial destiny is being flexible when things don’t always go my way.
How I am going to build my flexibility?
I have realised that I want to seize this opportunity, but the first major hindrance most of us face to implementing new habits, is the resistance to change no matter how uncomfortable the current status quo is.
We prefer to stay in the dark instead of finding actions to move us into the light. In inner dialogue kicks in an builds on our fear and overwhelm and we become almost paralysed in our ability to look under the bed and see the monster for what it is.
It is ok to feel this way, in fact it is natural as our prehistoric protective brains take charge to protect us from exchanging the status quo of our life with something that may challenge us.
What isn’t ok is staying trapped in that victim mentality. That is where creativity and growth is stifled.
Not a place of innovative thinking.
This situation, as devastating as the consequences are, is giving us the gift of time to work our way through this.
That means we can break down the action steps that follow below into small manageable tasks peppered with a “reward”, a quick walk outside (circumstances permitting), a 15 minute yoga or meditation session or just a quiet cup of tea.
Establish my current reality
In order to move forward we need to know where we are.
This means taking stock of our situation.
- What are the financial challenges we are facing.
- What are we good at or what do we do well, when it comes to our personal finances
- What do we need to work on
An integral part of taking stock is establishing a clear picture of our financial position, and we can do this by answering the following questions:
What Cash do I have that is immediately available to me.
This may be salaried income, income from passive investment and your rainy day fund….. because this is that stormy rainy day.
This does not include your savings that are tied up for a set period and your investments.
What cash is being offered to me via Government support.
I found the Money Advise Service had a particularly useful and comprehensive analysis of all the options.
Where is my cash going on a monthly basis?
Use your bank and credit card statements to identify where your money goes and put a schedule together of your expected outflows for the next few months.
Assign a level of priority to your cashflows
- Food and shelter are your number one priorities at this point.
- Second are utilities, water and communication lines.
- Third are debt commitments you need to meet.
- Fourth of those expenses you can eliminate, reduce or put on pause for the next month or two.
If you identify that there is a shortfall between your cash and priorities 1 -3.
Start working through the items and approaching your providers to let them know you are going to have difficulties making those payments.
Ask for a payment holiday on your rental or mortgage payments, delay repayments on debts and get council support on utilities.
Approach your bank to see if you can early exit time based savings without an exit penalty.
Temporarily stop all contributions to your retirement and investment accounts
Make every attempt to avoid cashing out any investments you have in the stock market at this time, but remember these are unprecedented times and our priorities are to look out for our health and wellbeing and that of our families right now, which means we may need to do whatever we need to do at this point.
Establish a crisis spending plan
This is not meant to be all about deprivation. It is a much more positive plan in that it is your choice and it is you taking control of something you can control in your changing reality.
This spending plan;
- Eliminates all non essentials
- Directs the cash to keeping you and your family healthy and ensuring all your basic humans needs are taken care off.
Look to the future
For many of us this financial clarity and control may be a new paradigm.
And that is fantastic, we have started to implement habits that will support us now and set us up for financial success in the future.
If you find you have any spare cash, direct it to building your emergency savings fund as a starting point and circle these surplus amounts as funds to be added to your retirement and investment accounts in the future.
Time is a fertile ground for creativity. Use this time to identify where you can potentially monetise your skills online. This may turn out to be an alternative income source in the future.
Set yourself up for success
This situation is unprecedented. It is overwhelming and scary.
Don’t become isolated, physically and mentally.
Get support. Don’t let fear, anxiety and shame keep you trapped inside your head at this time.
Reach out to the support structures that are available to you. Your family, your friends, and support groups such as Step Change, Business Debt services and Samaritans.
Your overriding priority right now is you and your family and keeping healthy. Please don’t forget that.
A key to financial freedom is peace of mind and knowing you are prepared for the what-if’s in life. Grab the flexibility in a crisis checklist and build your financial resilience.