A key focus of my blog is Financial Literacy/Money. Most of us will experience a major negative financial event at some point in our lives. The key though is preparing for the recovery, and then recovering. The following contributed post is entitled, Recovering Financially From A Unique Set Of Circumstances.
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The vast majority of people are conditioned to react to the word “debt” as though it’s a toxic, inextricable state of affairs. For sure, none of us wants to be subject to a financial burden that pushes down on us for an extended period, but it is worth developing a more sophisticated understanding of how debt works. Not only in terms of how it can be maintained safely, but also how it can sometimes be simply inevitable.
Let’s take the current situation as an example. Although different areas have opened up after the initial pandemic lockdown, to a greater or lesser extent, we are far from a “normal” situation. People have lost out on paydays, which means they have had less money to spend. This means that businesses have seen their takings reduced, and some businesses will not survive. Which means that other people lose out on paydays. Sound financial management – which is always worth practising – will not, on its own, prevent a lot of us from serious debt burdens.
So what do we do about this?
Usually, when negative circumstances arise, the smart advice is to tighten one’s belt and look for alternative income streams until it all blows over. As second waves of the pandemic develop in those countries fortunate enough to have managed the first wave, no-one knows when this will all “blow over”, but you wouldn’t bet on it being this side of 2021. That’s a long time to be in a financial holding pattern.
It is hoped, broadly, that some top-down plans will arrive at some stage to assist those of us worst affected, but again, it’s a waiting game. For some of us, the best bet may be to go on the offensive: looking for payment holidays from creditors; finding out about refunds we may be entitled to; reading a DTSS U.S. review or two to see where you might benefit from getting more proactive.
Working on future financial independence
Perhaps the most important element of recovering from this unforeseen public health crisis is being ready for it to happen again. This is a set of circumstances to which most of us have never been exposed, and it’s reasonable to imagine it wouldn’t happen again in our lifetimes. We shouldn’t count on that being the case – recent history shows us things can always get worse. So being ready to not rely on a single income stream is essential. Diversifying your revenue is a priority.
Right now, it may be tricky to find a way to ensure continued income; as we’ve said, all but the richest are experiencing anxious times right now. However, now is the time to think about how we can build back from this, work out how and where to invest money so that – if this all happens again sooner than expected – we can be confident that there will still be money arriving in our accounts every month. It may seem like a pessimistic way to look at things, but we’ll be grateful for some level of preparedness if we have to weather another storm.