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KT edit: Get your personal finances in order during the crisis

Filed on June 21, 2020

This pandemic and the chaos it is has caused is also an opportunity for people and households to rework their budgets

With pay cuts, furloughs, and redundancies doing the rounds at a pace never experienced before in modern history, it appears as if the world is crashing all around us. Businesses are sinking, individuals and households are struggling to make ends meet or are deliberating while holding back on expenses as uncertainty looms large over careers and the future. According to the UN, some 315 million jobs have been lost due to the coronavirus pandemic. The numbers could rise exponentially. In the Arab region, there could be an 8.1 per cent decline in working hours, which is equivalent to five million full-time workers. Amid the health crisis, personal finances and mental health are being affected the most as people try to stay healthy as they tide over the crisis. But it need not be this way. Good mental health and ability to reason, question every move or decision, whether related to our personal finances or other events could go a long way in helping us strike a balance. This pandemic and the chaos it is has caused is also an opportunity for people and households to rework their budgets, cut down on luxuries, and save for a rainy day.

Perhaps, there is merit in taking the focus away from paycuts and take a holistic look at income, expenses and investments. If the incomes have reduced, so have some of the discretionary expenses and liabilities. Banks in the UAE have been offering interest-free deferrals on instalments, rents have gone down, and many schools have reduced the tuition fees. It is time to reassess our finances and make good of such rebates. For a lot of individuals who had done things differently by dipping their feet in high-risk investments that could have gone sour, this is the time for some hard lessons. For individuals who have been laid off, it is time to assess whether the redundancy happened because of the economic situation or was it because their skills are no longer needed. If it is a skill-based redundancy, now is the time to upskill and invest in oneself, and identify the future course of action. This pandemic is throwing challenges that a many of us aren't prepared for. But it is also a reminder of some of the virtues that should be the guiding principles in our personal lives. Saving and investing before spending, living within our means and ensuring collective debt or running expenses are one-third of the monthly take-home are all-weather rules. Sometimes budgets don't behave the way we expect them to, but the key is not to get frustrated with our situations. It helps to be mindful of spending habits while not getting emotional about money.

 


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