The Covid-19 pandemic has turned the world upside down by the start of this year. Many businesses permanently shut down which left millions of people all around the world unemployed.
While the global lockdown measures ease, it is important that we need to look at our current flow of cash. We’ll never know, there might be another crisis like this. Almost everyone is periodically getting back on track now, finding jobs, re-opening of businesses and business as usual under the new normal of social distancing and wearing of face masks. However, have you sat down and think about how to gear up for a life with COVID-19 just around the corner? Below are some essential tips on how to source funds in times of crisis:
- Grace periods on utilities and loans are everywhere, make sure you take advantage of them.
- Be updated if you are qualified for some government assistance programs like financial aids.
- Even if you have a full-time job, consider having another source of income, like online businesses or small investments.
- Be wise in taking advantage of loans or borrowing money.
No need to sugarcoat stuff, the COVID-19 crisis had placed a large hole in many people’s financial standing. To keep your finances stable in this era has been a challenging task, we came up with some helpful tips to effectively manage your finances:
There is no sugarcoating it: the coronavirus disease 2019 (COVID-19) is putting a dent in many people’s finances. Keeping finances afloat is a challenge for everyone. Here are a few tips to help manage your money.
Take advantage of your financial breathing opportunities
Managing and keeping a track of your finances is vital in times of crisis. There are always two things you need to consider and that is how to cut down spending or costs and the other is optimizing your source of income.
Whether you feel that you need it or not, we recommend that you take advantage of payment extensions from your utility or bank loan payments, whenever it’s available.
Almost every country affected by the pandemic has drafted laws about payment programs that are studied to be effective to lessen the burden of their people at these tough times. Most dues are cut into installments and due dates are being moved, use your extra cash to open another source of income like a small food business. Stay away from the inevitable bill shock, by effectively managing your bill priorities and being on top of your new payment structures.
Check if you are qualified for some government assistance.
Whether you are residing in the United States or not, we have heard of many assistance programs from different government programs worldwide. Make sure you are up to date with the news, announcements, and requirements to be qualified for that financial assistance. If you are a business owner, take advantage of government loans on the lowest interest rate for you to have the ability to get back on track. Just bear in mind that not everybody can be qualified on that financial assistance, have an open mind to think that many else may be needing the funds than you do.
Consider having an additional income source.
Minimizing your spending costs and relying on government financial supports will only take you that far but not enough to survive this ongoing crisis. The Corona outbreak has imposed lots of employment concerns and threats globally. Thus, looking for an additional income source is vital.
Work and business opportunities might still be available in lower-paying conditions or profits, so it’s important to juggle multiple sources of income. There is much freelance work at home opportunities available through the internet.
Consider learning profitable skills like content writing, web design, computer programming, and digital marketing and advertising courses which are highly in demand on our current market. Getting potential clients to come in next.
Another source of profit is selling pre-loved items that you don’t find useful anymore. Though it can’t be considered as a long-term and stable source of funds, but extra cash can go a long way and will definitely help you get through.
Be wise in loans and borrowing money.
Once you exhausted all three tips mentioned above, your last resort is to borrow money and enter new financial obligations. But if it’s badly needed, consider thinking about the following questions first before borrowing money.
- How much funds am I eligible to borrow
- How fast can I acquire a loan
- Am I capable of paying interests and fees?
- Will there be any penalty if any unforeseen circumstances that I miss a due?
- How long can I pay the loan back?
- Borrow wisely
Generally speaking, if you are able to borrow funds quickly with fewer requirements, you are also expected to return it the soonest agreed term within a reasonable interest. Keep in mind to calculate the interest rates and make sure to assess your capacity to pay for you to avoid being drowned in debt. Another thing to consider is to always be careful from whom are you taking the funds.
Here are the common institutions you can get a loan from:
Pawn stores have always been easy access to cash whenever you are short of funds. As long as you have a valuable item to deposit as a form of collateral, you can get cash instantly. Pawn shops are often popular with those who are in need of short, short-term, quick cash loans.
The amount of money you can get is defined by the value of the item you have as collateral. Loan and payments from pawnshops usually can go from 30 to 120 days. For their interest rates, it can be 10 to 20% per month excluding penalties for late fees. What you need to know is pawnshops have the ability to resell or take away your collateralized item if you missed a payment in your contract term. Reselling of unredeemed pawned items from pawnshops is referred to as an auction.
These are established institutions that offer various loan products. The most common type of bank loan is a personal loan. The bank can lend you money without collateral but with various requirements, which normally are your proof of income, identification, and address, and your capacity to pay the loan. Make sure to consult with your bank for you to understand the terms and conditions. Bank loan processing can also go from a week to month, depending on how fast you can comply with the requirements and you have to pass all verification and credit investigation processes.
Bank loans come in handy for debt consolidation, capital funds for a business, and future events that you will need money. It’s not advisable to file a bank loan if your in urgent need of cash, like medical emergencies or bills payment since it has an appropriate processing timeframe. The interest for personal loans from the bank can be as low as 5% annually to 10% with a considerable payment term that loans can be paid up to 10 years.
Another fast cash option with minimal requirements, however, the interest rates are higher compared to the first two institutions mentioned. Also, loan sharks often have shorter payment terms, usually 30 days for you to pay back the loan. They offer a fast loan disbursement, as long as you have proof of identity and address. Loan sharks also deduct some high processing fees from your loan and often have a high penalty and compounding interest. Interest rates from loan sharks can be 20% to an unbelievable 50% rate. The interest rate may sound absurd but since its an easy loan option, many are still patronizing loan sharks.
So businesses and employers are offering emergency cash loans. You might want to ask your employer about this. The loan amount, payment terms, and interest rates can differ from company policies. Just make sure to think twice when availing of salary loans since once granted a company loan, the payment is usually deducted from your payroll which directly affects future money management.