The coronavirus is affecting everyone financially in one way or another. Even if you haven’t lost your job, the threat is there. Are you prepared to handle the worst-case scenario? Have you looked at your finances to see where you stand?
While we are all in lockdown, it’s a great time to take stock of where you stand and the steps you can take to prepare yourself for whatever comes your way. Check out the top ways you can take control of your financial life while in COVID-19 lockdown.
Calculate Your Net Worth
Do you know how much you’re worth? If not, now’s a great time to figure it out. It’s not as complicated as it seems. Your net worth is just your assets minus your liabilities. Your assets are things like:
- The equity in your home
- Your investments
- Your savings
- Cars you own
- Any other assets of value
Your liabilities are your bills or debts. Think of things like your mortgage, car loans, credit cards, and student loans. Anything you owe money on takes away from your assets. The difference (which is hopefully positive) is your net worth. If it’s not as high as you’d like, figure out where you can make changes. What liabilities can you get rid of quickly to increase your net worth?
Read more about calculating your net worth:
Build Your Budget
When you have nothing but time on your hands, what better thing to do than create your budget? This is a great time to get honest with yourself about your spending. Create categories and look at your spending in each category. Where are you overspending? Where can you cut expenses?
Once you trim the fat on things like shopping habits and memberships, it’s time to get really honest with yourself. What bills can you negotiate or shop around to get better rates? Should you refinance your mortgage to take advantage of the low rates? Now is a time to make your budget as bare-bones as possible – thinking of the worst-case scenario so nothing takes you off guard.
Read more about managing your spending:
Consolidate Your Debt
Take an honest look at your debts. If you still have a job, think about ways that you can consolidate your debts. This will help decrease the interest you pay as well as make it less overwhelming. If you lose your job, you won’t be able to take out any new loans, so the time to act is now.
If you’re worried about losing your job, now’s the time to act. Do you have equity in your home? Use it to consolidate your debt while you’re still employed. Once you lose your job, the opportunity to refinance is lost. Don’t waste time.
Review Your Investments
What’s your investment style? Have you always taken chances and invested aggressively? Now’s the time to reverse those decisions and take a more conservative approach and to invest in things that aren’t affected by the market. Putting your money in safer investments increases your net worth and helps ensure your financial future rather than creating fear.
Read more about managing your investments:
We all need to take care of what we can control during the COVID-19 lockdown. We’ve never experienced something like this before, so it’s a lot of trial and error for everyone. Taking care of your finances now will help you should things get even worse. While we don’t want to focus on the ‘bad,’ it’s time to be proactive.
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