Life is a succession of lessons which must be lived to be understood. – Ralph Waldo Emerson, an American Essayist
How are you doing? It’s been a strange couple of months, right? The COVID-19 had the Philippines and the world at a stock-still. To reduce the spread of the virus, our government has imposed some strict guidelines, that is why most of us Filipinos have been staying at home for the past six months.
But as resilient Filipinos, we always focus on the brighter side of things and learn from the challenges that come our way. Here are five financial situations that we’ve learned while staying at home as Filipinos:
1. Increase emergency funds
Months ago, you may be one of the Filipinos who were living their daily lives feeling stable and secure of your job and source of livelihood. But when the government enforced restrictions for your company to follow, it is hard to avoid wage cuts or, worse, unemployment. This pandemic has highlighted the need for an emergency fund to protect ourselves against prolonged loss of income. It is recommended to have at least three months’ worth or, at most, six months of expenses saved in an emergency fund. Putting away this amount of money may seem expensive, but the COVID-19 crisis has shown us why each one of us should have an emergency fund.
2. Allocate more money to pay outstanding loans
It is often said that loans and debts are the killers of financial dreams. Having a high income is amazing, but if you have a high income-to-debt ratio, you could be feeling a lot of financial pressure during this crisis. Due to the decrease in income and savings brought upon by the pandemic crisis, you may have skipped a loan payment, leading to a bigger financial obligation to face in the future. This is why working on lowering and paying your outstanding loans is always a smart move toward stability.
3. Selective spending
We live in a consumption-based economy, but the recent events have turned this upside down. Due to the COVID-19 regulations, many of us have delayed major spendings, such as going on vacations, dining out, or going to the movies. To simply say, COVID 19 has made us re-evaluate our wants and needs. We have learned to prioritize spending on essential bills such as rent, electricity, and food. If these new selective spending routines stick even when the situation goes back to normal, it will make us spend less money and help us in saving money.
This crisis has not only taught us to cut down our expenses, it also taught us to spend on assets that can grant us additional income. Some of us have invested in materials to start up our own side hustles at home. Whether it is selling homemade goodies or selling pre-loved items online, this crisis has really taught us to be creative in finding ways to build multiple streams of income.
4. Purchase more investment vehicles
Last April, the PSA reported that 7.3 million Filipinos were unemployed, and 13 million employed Filipinos were not able to report to work due to the COVID 19 regulations. One thing that the COVID 19 pandemic had made us realize is that our jobs are not as stable as we thought they are. To achieve financial security, it does not do well to only depend on salaries and wages. This is where investing comes in handy. Investing is a great way to earn money. It sets you up for a better-planned future, and it is also very convenient when something unexpected (like this pandemic) happens. Purchasing investment vehicles such as UITF, Stocks, Mutual Funds, and Bonds is a great way to start investing. Now is a great time to buy investment vehicles because stocks and shares are currently on sale and are cheap due to the economic crisis. You will also enjoy greater returns out of these investments, once the pandemic crisis is over and the economy returns to normal. If you want to learn more about investing, you can look forward to our article about it or, better yet, talk to a Registered Financial Consultant.
5. Investment in insurance policies is crucial
In the Philippines, the COVID-19 rapid and swab tests in private labs cost around PHP 2,000.00 and PHP 5,000.00 respectively. There are public hospitals offering free COVID-19 tests but the waiting time for your test results to arrive may reach from weeks to months. It was reported that the cost of treating COVID-19 in the Philippines ranges from PHP 43,000.00 up to PHP 1.1 million. You can just imagine how heavy this hospital bill is to a Filipino’s finances. This is why investing in health and life insurance is crucial because it takes care of increasing medical expenses and a person’s well-being. This crisis has taught us that we should not delay and always update the insurance for us and our loved ones.
The Bottom Line
One of the biggest lessons the COVID 19 pandemic has taught us is that life is completely unpredictable. We may never deal with this kind of crisis again, but unexpected events will always happen in our lives. To protect yourself and your loved ones from these events financially, you can contact a Registered Financial Consultant to help you in understanding your finances better. This way, you can be prepared against any challenges life throws your way.
Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs, or circumstances as your fiduciary. This column is mainly for your entertainment and education only.
Discussion about this post