Tuesday, August 25, 2020

Important Financial Skills to Equip Yourself with Amidst a Pandemic

Did you know that in June 2020, over 30 million Americans claim to be unemployed?

A Forbes article in July 2020, reported that the United States already has 51 million people unemployed, and there is no assurance if these numbers will decrease in the coming days as the worldwide financial crisis lingers.

A decade after the most recent recession, the global economy is heading into another one. As the COVID-19 pandemic continues to keep people at home, it also continues to shutter businesses causing financial crisis - not just in the United States, but almost anywhere in the world.

Everybody gets hurt during a recession. As output falls, many people lose jobs and those who are seeking jobs find it hard to find one.

This pandemic has exposed how vulnerable our finances are. The fact is, we are not prepared when disaster, calamities, economic collapse, and other major problems relating to finances come. This pandemic showed us that it is not enough to have money; but we should be financially literate, above all, so we can manage our life well, especially in trying times. 

How financially literate are we? Many people are now unemployed, while others are working reduced hours due to the COVID-19 pandemic. Now more than ever is the time that they need to be financially literate for them to be able to make smart and effective financial decisions. Financial literacy can help people stretch their dollars further and avoid taking on huge amounts of debt.

Being financially literate is a skill set that’s lacking in most people around the globe. In the United States, studies found out that 43 million Americans or 17% are struggling with most (if not all) aspects of their financial lives. There are 135 million or 54% struggling with some aspect of their financial lives and 29% or 73 million people are spending, saving, borrowing, and planning.

Th U.S. has the world's largest economy yet it ranks 14th when it comes to the percentage of adults who are considered financially literate.

This is the picture of financial literacy not just in America, but in most parts of the world. As people continue on this uphill battle during this difficult time, now is as good a time as ever for everyone to acquire or increase their financial literacy skills.

One of the fundamental pillars on financial literacy is budgeting, which simply means balancing your expenses versus your income. It involves a process of creating a plan to spend your money and it allows you to determine in advance whether you will have enough money for the things you need or would like to do. Budgeting is one of the most important skills we need to equip ourselves with everyday in almost everywhere we go and in everything we do. 

However, with a lot of people losing their jobs nowadays, how should you budget on a limited or reduced income? 

First, consider minimizing your biggest expenses such as housing, food, and insurance. Keep grocery costs low by shopping in bulk,and buying seasonal and local produce. Cook simple yet tasty meals that only require a few ingredients. Pay in cash, and avoid loans and credit cards so your dollars will last longer.

If you're really finding it hard to budget your daily or weekly finances, you might need a budget calculator. This online personal budget planner is very handy and so easy to use. It estimates your biweekly, monthly or even your annual income; and converts that to the recommended budgetary guidelines. The budget planner shows how your spending habits compare against others and how the spending habits of people from different income level and age groups change dramatically. 

The initially set percentages can be adjusted to suit your needs and budget. The total row shown at the bottom of the calculator presents how close your percentages are to 100% and how much you might need to change your spending habits to match your current income.

Having a skill in budgeting will empower you as it will allow you to manage what you have wisely. With COVID-19 still putting everyone at risk, millions of people are struggling to make ends meet. This is a most challenging time, but having the right financial knowledge will give you the confidence to make informed decisions about you personal finances and create a more stable financial life despite the pandemic.

2 comments:

  1. It so sad how many peope are out of jobs right now.

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