It is no secret that Coronavirus is causing a severe financial crisis for most people all over the world. Experts predict that millions of jobs can be lost because of the Coronavirus pandemic. There is consensus that the year 2020 and 2021 are going to be very tough for financial systems.
However, every experience, be it a good one or a bad one, teaches us many things. In the case of Coronavirus, there are many learnings to be taken when it comes to future similar disasters. When it comes to managing or maintaining your personal finance, the Coronavirus has been a harsh teacher.
In this article, one of the leading financial advisory firms in the world, Hornet Partners looks at the top five personal finance lessons we should learn from the Coronavirus pandemic.
Top 5 Personal Finance Lessons to learn following the Coronavirus by Hornet Partners
1. Have Plenty of Savings
According to studies conducted, nearly 80% of the American population does not have any savings. People do not believe in the concept of savings whatsoever. This is one of the worst personal finance mistakes, which people can do.
It is necessary to save your hard-earned money little by little every month. This helps you prepare for unforeseen emergencies like the Coronavirus outbreak.
2. Not Taking Help From Financial Advisors
According to Hornet Partners, a majority of people think Financial Advisors are expensive to seek help from. However, that is not the case. Financial experts can help you during times like these. They can help in repaying loans, working on easy interest payments, etc.
If you have access to your own financial advisor, you will be in a much better position during such crises like times than a majority of other people.
3. Do Not Use Your Credit Cards Aggressively
Please remember that credit card interests do not lower during crisis moments like the Coronavirus. This means that like other times, it is best to avoid using credit cards. This is only going to drive up your interest payments and increase your financial burdens.
Most people are using credit cards for panic buying at supermarkets and departmental stores. Both panic buying, as well as using credit cards to pay for it is wrong.
4. Not Being Aware of Financial Issues, Problems and Solutions
According to a study by the George Washington University School of Business, Americans are the worst at comprehending risk-based investments. They simply are not aware of making investments that can be risk-free and safe in nature.
The study also shed some light on the fact that a majority of Americans are still living paycheck-to-paycheck. This reduces their ability to make proper plans for their financial futures.
5. Lending Money to Friends and Family Members
All financial experts classify lending to family and friends as ‘bad debt’. This is an investment, which is never going to come back. You are never going to receive the actual amount. Even if you do receive it, it is not going to be on time.
It might be harsh, but you need to protect yourself against global emergencies as and when they come. If the Coronavirus has taught us one thing, is never lend money to your near and dear ones. You are not going to get it back at times when you need it the most.
Hornet Partners state that this Coronavirus emergency can be a wakeup call for many when it comes to managing their personal finances. By following the five points in the article, you can rest assured that you will be in a much better position.
Can you think of some other financial lessons that we can learn following the Coronavirus pandemic? Help us know about them in the comments section below.