Financial Planning Steps to Survive the Crisis of COVID-19

Who would have imagined…three months have just passed 2020 and it came an unexpected outbreak of COVID-19 that adversely affects Thailand’s economy to an extent that it can be considered an economic collapse. Even worse, the pandemic has a tremendous impact on earnings of people in all segments, be they the public sector, companies, business owners, or even white-collar workers. 

As a result, while ‘incomes’ tend to be consistently reducing with no tendency for the rise, ‘expenses’ and ‘obligations’ are indeed tirelessly approaching you regardless of the ongoing of crisis. Moreover, the impact seems to be unbounded, considering its range and duration. With all these reasons combined, ‘financial planning’ would be the greatest helper to make you survive all the difficulties. As suggested by its name, a plan always comes with steps to follow, and here are the 3 simple steps for you. 
 
1. Explore Your Assets
Before aiming for the future, let’s look into what you have in your hands. It’s better to start from knowing your assets, e.g. savings, bonds, shares, or mutual funds, and make sure you know where they’re kept. In addition, you should also be aware of the assets that are easily convertible into cash—savings or money market funds, for example. Knowing this is highly important, especially during a crisis where unexpected expenses are inevitable. 

Moreover, don’t forget to be aware of your debts and expenses, be they fixed expenses, including house loans, car loans, installment payments, or insurance premiums, or variable costs which incur based on your lifestyle, such as water and electricity charges, clothe shopping, or medical fees. 

Then, deduct your expenses from the assets you have. Doing this makes you know the true financial status of yourself. To say it simply, you’ll know how many months of expenses can be covered by the assets you have. 

Some of you may look into other advantages and benefits available, e.g. social security funds, group insurance, previously purchased insurance, in order to get prepared for unexpected events that potentially arise at anytime in-between. 

2. Advance Budgeting/ Daily Allowance Allocation/ Expense Tracking
When you realize how many months from now you can survive by spending the existing budget, the next step you should do is to plan how to optimize the limited resources you have in a disciplinary manner.
Starting from setting a budget plan in advance, you may go with monthly, and then daily. During a crisis like this, all expenses need to be tracked in order for you to review whether your expenses have aligned towards the pre-determined plan. If not, let’s just do it better in the following month. All in all, this is another way to cultivate your financial discipline.

Up to now, a question may pop up in your mind—for how long should we get prepared by doing the budget planning? On average, previous crises normally lasted for approximately 6-12 month, and the business sector got recovered afterwards. For this crisis, as everything is still unclear, you’re suggested to play safe by sticking to a 12-month plan. 

3. Improve Your Liquidity Ratio
Based on the early mentioned two steps, you might find your financial conditions not bright enough to make you survive the crisis, so some may turn the crisis into opportunities. This step is a step that will fulfill everyone’s needs regardless of their financial conditions. 

As it’s relatively predictable that your income tends to decrease with low possibilities for the rise, doing a sideline job is an interesting choice, especially when online platforms become part of people’s life. You may turn your hobbies into money by using online tools, such as offering online courses, selling things online with delivery services, or even writing a blog. 

Even if your extra incomes are sufficient for you during the ongoing crisis, minimizing of expenses is something you should do as well. You can simply start from considering and reducing the variable costs as they are up to your lifestyle. For the fixed expenses, debts and obligations to be exact, if the amount you need to pay each month is excessively large and leads to inability to handle the repayment, you should find a way for a debt moratorium. Most importantly, keep in your mind that no more large debt should be made during the crisis. 

Apart from financial stuff, physical and mental health is another thing you should take care of at the same time. Exercise regularly, take care of your sanitary, and don’t pressure yourself too much as it potentially leads to stress. If you follow these steps, it’s expectable that, apart from surviving the crisis of COVID-19, you’ll also probably find a new hobby or a perfect sideline job!