Here Are Steps To Personal Financial Planning During COVID-19

By Cytonn Investments / May 14, 2020 | 9:56 am



Investment young adults

In the spirit of Mutahi Kagwe’s famous words “If we continue behaving normally, this disease will treat us abnormally”.

The onset of the COVID19 pandemic has brought about a necessity for adjustments in our day-to-day life. The most important adjustment is our personal finances and spending habits.

Having looked at the effects of the COVID19 pandemic. Here are some recommendations on how to go about financially adjusting our lives;

Examine your available financial resources

The pandemic has brought its fair share of business closures, leading to massive lay-offs and workers being sent on unpaid leave. Therefore, it is imperative that you check your job security and the likelihood of taking unpaid leave or being declared redundant. Also, if you have a spouse, engage your spouse on the same and try to identify the financial strength you can draw together.

Confirm on whether your business or what you do for a living is a non – essential service and if it will have to be closed for some period of time. Furthermore, it is time that you revisited any emergency fund and savings account you may have accumulated in the past.

Furthermore, it is critical that you invest some funds to ensure you are still earning some money. I would suggest investing in a Money Market Fund where you earn a good return and you have access to your funds anytime you need them. Investing is important but being able to withdraw your funds should an emergency come up is important.

Create a priority-based spending plan

Look at your monthly expenses on household commodities. Try to limit unnecessary spending and cut back on non-discretionary expenses which mainly include: Gym membership, appearance maintenance, Restaurant meals, Local and international travel, reduce purchasing of premium brands of commodities including Clothing, shoes and also reduce on subscriptions not necessary during this period example; Sports channels. All this money should be redirected to savings.

Contact your creditors

The Central Bank of Kenya (CBK), and banks agreed on the need for borrowers to renegotiate loan terms. If directly affected by COVID you can engage your bank to renegotiate your loan terms, including mortgages and asset finance facilities. Engage your landlord as well in the event that you foresee not meeting your monthly rental payment obligations.

Revisit your medical insurance coverage

Review your health insurance coverage by making sure that your NHIF and medical insurance premiums are up to date. Counter check on who among your family members is covered and the Co-pay terms for out of pocket costs, so as to avoid surprises in case of sickness. Inquire from your provider on what types of treatments are covered in the plan? Check if there is any effect if the medical insurance was company provided and you are laid off. Lastly, for any life insurance – Check on the list of beneficiaries and update it.

The specific Don’ts

Avoid getting into more debt – There is the allure of mobile loans, credit cards, or any other easily accessible loan facility. Take debt only when necessary and have a payment plan in place. Do not draw money from your pension plan – COVID19 is a short-term disruption that should not interfere with your retirement savings.

Lessons learned going forward

Always build and maintain an emergency fund – This usually helps reduce financial vulnerability in times of difficulty cushioning against a sudden stoppage in income. The best-recommended target is a savings of 3- 6 months which gives you breathing space to adjust. Money market funds provide a good avenue for savings platform that could fetch you a good return. Also, create a low – consumption and high savings budget; Post COVID19, consider spending less on non-discretionary items e.g. Leisure travel, spontaneous buying, and social spending. Always remember to treat your savings as part of your expenses rather than an afterthought on what is left of your income.

The recommendations above may appear hard to maintain, but it is a sacrifice we have to consider. I remind you of Mutahi Kagwe’s famous words “If we continue behaving normally, this disease will treat us abnormally”.

Written by Solomon Kariuki, a financial consultant at Cytonn Investments







More Articles From This Author







Trending Stories










Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE



ARCHIVES

2020
  • January 2020 (272)
  • February 2020 (310)
  • March 2020 (390)
  • April 2020 (322)
  • May 2020 (336)
  • June 2020 (74)
  • 2019
  • January 2019 (253)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (251)
  • July 2019 (338)
  • August 2019 (293)
  • September 2019 (306)
  • October 2019 (313)
  • November 2019 (362)
  • December 2019 (320)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (256)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (185)
  • 2017
  • January 2017 (183)
  • February 2017 (194)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (245)
  • June 2016 (182)
  • July 2016 (271)
  • August 2016 (248)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (108)
  • May 2015 (116)
  • June 2015 (120)
  • July 2015 (148)
  • August 2015 (157)
  • September 2015 (188)
  • October 2015 (169)
  • November 2015 (173)
  • December 2015 (207)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950