Manage finances during the Covid-19 Pandemic


UMMATIMES - The Covid-19 pandemic is filled with times of uncertainty. Managing finances during a pandemic needs to be more observant than during normal conditions. Many companies have experienced a decline in income, so they decide to terminate their employees.

Thus, it is not uncommon for workers to lose their jobs during a pandemic. In addition, even though they still have a job, they often have less income. The following are tips for managing finances during a pandemic, especially for regulating consumption and expenditure patterns:

1. Adjust variable expenses using the average method

In regulating monthly cash flow (income and expenses), expenditures are divided into two types, namely fixed and variable (non-fixed) expenses. Variable expenses can be in the form of daily vehicle fuel costs or transportation costs, grocery shopping costs, electricity costs, and others. Meanwhile, fixed expenses can be in the form of home or vehicle installments.

Fixed expenses are certainly easier to record and determine the amount than irregular expenses. For that, we recommends, do an average calculation of your variable expenses in three months or more. For example, calculate the average electricity bill for 8 months. For example, if after calculating the average electricity bill for 8 months of reaching IDR 1.2 million, it is recommended that you allocate the maximum amount of money in that figure for electricity needs.

2. Prioritize mandatory and necessary

Prioritize your expenses for needs that must be met or paid for in advance. First, buy basic necessities such as food and drink, to save money for children's education. In addition, there are also other mandatory expenses, namely paying taxes and debt repayments if any. Needs that are desirable or related to hobbies or lifestyle can certainly be reduced a little, especially if our financial condition is still not healthy.

3. Pay off high-interest consumer debt, and don't add more

If you have sufficient cash reserves, pay off short-term consumptive and high-interest debt, whether on credit cards, installments without credit cards, or online loans. Allowing this debt to remain can actually disrupt your cash flow in the following months. If you have to be in debt, make sure the debt you submit is productive debt. With a note, your total debt does not exceed the asset value and the installments of all your debt per month are still below 35% of your income.

4. Keep an emergency fund where it should be

Surely an emergency fund must exist and be available at this time of full uncertainty. The goal is to cover the cost of living when we lose our jobs. We suggested, a single person may be sufficient with an emergency fund of 3 to 6 times the monthly expenses. However, for those who are married, it is better to spend more than 6 times per month. Saving an emergency fund is actually quite simple, you only need to set aside 10% of your income per month on a regular basis.

5. Think twice about making a profit from insurance

Take advantage of insurance for protection needs or protection against risks only, and buy health insurance or life insurance with pure benefits for health and life protection. Do your best to allocate a maximum of 10% of your monthly income and no more, for protection needs.

6. Still set aside money for investment, but in accordance with the goals

Every month, you still have to prioritize spending on investing in order to meet short-term and long-term goals. Write down in detail the things that are your short-term and long-term goals. Also write down the amount of money needed to meet that goal in the future using the annual inflation estimate. Then choose a variety of investment instruments that match your risk profile.

7. Just set aside 10% of income for things that are desire

Self reward or indulging yourself by buying goods that are desirable is not prohibited in financial planning. This is a way to appreciate yourself after we have worked hard, so that we are happier and free from stress.