Currently, the COVID-19 (novel coronavirus) pandemic is wreaking havoc on economies around the world as it spreads and causes widespread panic. There seems to be no investor or market left unscathed by the fallout of the pandemic, and this situation is certainly leaving many people wondering if they’ve waited too late to protect their assets.
A financial crisis is ultimately unavoidable, but is it too late to save your personal finances from the current financial situation seen around the world? The short answer is no, and in this article, we’re going to outline 7 straightforward steps you can take to prepare your personal finances - even in a time of crisis, such as the one we’re facing now. It’s not too late to strengthen your assets!
1. Build Up Job Protection
In any economic crisis, layoffs, furloughs, and terminations are going to be seen across the board, and the COVID-19 pandemic is certainly no exception. If you are currently employed, now is the time to do everything in your power to keep your job. If there are extra projects to take on, tackle them now.
Job protection can be found in other places beyond your current job. For instance, outside of work hours, now is a wonderful time to build up job skills with online courses. Additionally, now is the time to work on a side hustle. The more job skills you have, and the more streams of income you have, the better.
2. Reduce Your Spending
Now is not the time to go on a shopping spree or run up credit card debt. In fact, now is the time to work towards slimming your budget as much as you can.
Cut down on the number of times you’re outsourcing meals each week, and try to cook in. Try to make use out of the things you already have before going out to buy more. Do you have unnecessary bills, such as for streaming services or subscriptions you’re not using? There’s no time like the present to cut them out. Call your internet service provider to see if you can negotiate a lower rate, and right now, with everyone driving less due to stay at home orders, it’s a great time to call your insurance company and see if they can lower your premium or offer a refund of some sort.
3. Build Up Savings
While you’re staying home more, it’s a fantastic time to work towards saving money. Building up savings right now is critical because we don’t know what the coming months will truly look like.
You need a solid savings, as well as a dedicated emergency fund. Many experts agree that you should have some cash on hand for emergency, as well as up to 18 months of your income set aside as part of your savings. If work becomes inconsistent or if you lose your job, you’re going to need a solid savings and cash emergency fund.
4. Reduce Your Debt
While also saving, you should be working to eliminate or reduce debt. Whether that’s in the form of credit cards, a mortgage, or an auto loan, cutting down your debt only stands to benefit you in the long run by freeing up cash that you could be putting elsewhere.
5. Hold Foreign Currencies
In a time of economic crisis, it’s a great idea to hold foreign currencies because this strategy can ensure a higher return on your cash holdings while offsetting poor interest rates often seen in times of economic turmoil.
There are jurisdictions that offer wonderful opportunities in foreign currencies. For instance, Singapore consistently offers higher yields than the American dollar.
6. Diversify Your Assets
Aside from dollars, your assets should ideally include precious metals - such as gold and silver - and cryptocurrency. Diversifying your assets is an exceptional way to hedge against the panic we’re seeing all over the world right now. Plus, precious metals stowed offshore have no reporting requirements for U.S. citizens.
7. Leverage Offshore Banking
Offshore banking is a strategy commonly used to reduce tax liability and enjoy greater asset protection, and the same rings true right now. With offshore banking, you can diversify currencies and investments while ensuring that your assets are safer than they would be in the domestic market.
Takeaway
As the COVID-19 pandemic continues to ravage markets around the world, investors are quickly changing their habits to ensure that their assets are safe. When it comes to your personal finances, there are plenty of things you can do to protect yourself, and all of the steps in this article will give your finances the best chances in a terrible economic climate.
APR
2020
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