With COVID-19 seemingly impossible to contain in most countries, new cases are reported almost every day. In this situation, financial crises are bound to happen. Currently, most markets are crumbling, and banks are limiting just how much you can withdraw from your account on a given day. Without these regulations, banks would be swamped by customer withdrawals and would fail, which is a bad thing financially.
With that in mind, how do you prepare for a financial crisis? You may have never experienced a financial crisis before and are unsure what it entails. But you are certain of one thing: you have to be prepared for it. Especially financially, you need to make sure you are making good decisions.
One thing you know is that you have to ration your use of both your finances and your goods. A crisis can be anything from illness, accident, or, as we have it today, a pandemic that has caused some countries to be in total lockdown. So, how do you ration your goods and finances?
Spend On What's Essential
One downside to a crisis is that, in most cases, you don't know how long it will take to end. That's why you have to buy only essential things when you spend. Forget luxury for a minute and focus on the most important aspects of your life. Forget about paying for your gym membership for a while and focus on spending on health insurance instead. Also, you can take out personal and accident coverage, just in case.
Also Read: How to Manage Money While You're Still Young
Don't Panic
Whenever there's a crisis, we tend to go straight into panic mode. This can mess you up financially as the crisis requires you to be calmer than ever. When you panic, you go into panic-buying in most cases. When in that form of state, you likely won't go for the essentials and instead buy things you don't need. You need to ration your money, right? So, why go into panic state buying mode? Stay calm.
Spend If It's A Must
This applies to both goods and money when you're in a financial crisis. You don't know when you can access your money if it's the kind of crisis we are in today. So, only spend when it is a must. If you can go without food, then do it. If there's tap water and the government assures you it's clean, why do you have to buy water? It's time to suck it up and only buy things you need but don't have.
Make A Budget
If you've never had a budget before, then this is your time to start. Budget for the whole month or two when you're in crisis. This ensures that you get only what you need and don't forget anything you may need. Then, you can save as much as possible since you only buy essentials.
Minimize Your Bills
You now have to prepare to minimize your bills. You're in a financial crisis. After all, this isn't the time to leave your water running or electricity unchecked. You may run out of both with no extra cash to pay up. Keeping a close eye on your frequent bills ensures you spend less on them and ration them as much as possible. If there are bills you can get rid of, then this is the time to do just that. Luxury cable subscriptions should be lowered to the lowest possible rate or canceled.
Conclusion
Rationing your money and goods to see you through a crisis isn't easy by any measure of imagination. But when the time comes, this is something that has to be done. If not, you may not last the financial crisis you're facing smoothly and unscathed. You'll get through it by making a budget, spending well, and keeping your eye on the ball through the crisis.
