In a time of crisis, nothing outweighs the significance and the benefits of proactive strategy. At a time when governments around the world are re-evaluating their economic priorities and spending practices, it is all the more crucial for each household to be able to organise and sustain itself. It is going to take a collective effort on many fronts for us to come out of this extraordinary situation as unscathed as possible.

Prioritise

Global emergencies like this have one thing in common: they completely redefine what we had considered as normal so far. So, before determining exactly what changes need to be made to your budget, it is important to determine how much your economic situation, or financial baseline, has changed from what it was prior to these circumstances–and so, how much of a deviation your new budget will require from your existing one; and what new factors, specifically, it will have to account for and address. 

We can think of the changes to our budget and the economic hurdles that may come up immediately or gradually, within the contexts of the short-term and the long-term. Here are some things to account for when revising your budget in light of these unusual global circumstances.

In the short-term

Take stock of your financial situation

What does your income look like? What does your job security appear to be over the long-term? Do your savings equip you to steer through any sharp turns to your income? It is very hard to determine exactly what the duration of these special circumstances are, these are essentially the questions and challenges your budget will have to be designed to address.

Explore your government’s schemes and economic benefits

During this time of crisis, governments the world over are offering solutions and bailout measures pertaining to the specific concerns of their social and economic conditions. Look into the economic allowances and stimulus packages being offered by your government, as well as the moratoriums issued by it to determine how these can be harnessed to benefit your financial situation and ease some strain off your new budget.

Categorise your expenses

If you don’t generally categorise your expenses, creating some broad categories of expenses (housing, utilities, food, insurance) will help you compare and contrast between your existing budget and the one you need to compile for these special circumstances. This will also make it easier to single out the non-essential expenses that can be cut-out with immediate effect and little consequence. If you do have some financial surplus beyond all of this, experts suggest re-routing any non-essential expenditure to investments in yourself. Given the ambiguity of the socio-economic situation we’re going to enter post this pandemic, this is the best time to upskill yourself and explore new domains of knowledge and/or expand on your existing skill set.

In the long-term

Stock up

There are two concerns to this aspect of budget-allocation: your existing portfolio, and the expansion of the same.

First, regarding your existing portfolio, it is a good practice to apply the same principles against panic-buying commodities to the panic-selling of investments. In fact, it is especially important to hold on to existing investments at this time given that the ambiguity of the situation may cause you to incur considerable losses that could easily have been avoided with some patience otherwise.

Second, regarding the expansion of your portfolio, buying new stock is also advisable since a period of economic decline is usually followed by a longer period of economic incline. However, this requires that you pay keen attention to identifying markets and opportunities that have benefitted from the pandemic. The astute investor would be able to recognise that this is a significant opportunity to build a healthcare portfolio.

Plan for emergencies

Given the ambiguity surrounding the duration of these conditions, it becomes important to account for both foreseeable and unforeseeable circumstances. This is definitely easier said than done. So, it helps to keep it specific: think in terms of financial emergencies and health emergencies since these will be the most significant given the state of a pandemic. 

Financial emergencies can include the likelihood of an economic recession surfacing as a consequence of the pandemic (which may translate to a whole new wave of lay-offs threatening job security even after the pandemic is dealt with), the rising price of essentials, and so on. Health emergencies can include a member of your immediate or extended family potentially contracting the disease, the decreasing availability of health and hygiene essentials and so on. Actively allocating funds for these situations helps you mitigate any drastic surprises when they do come up; and, in the event that they never do, you come out of this situation with a sum of money saved up and set aside.