3 Ways Your Personal Finance Might Have Changed Because Of Covid-19
The economic and social disruption caused by the pandemic is devastating. Many sectors such as aviation and tourism have been impacted. Many of your close friends and family members have seen their fair share of extra work without compensation, pay cut and even retrenchment. Perhaps you are also personally affected by this.
The short term financial impact of a pandemic like Covid-19 can have a long term repercussion impact on you. Any wrong move you make at a crucial time like this can create gaps in your personal financial plan in the long run. Here are some ways that Covid-19 could have impacted your own personal finance according to a financial impact research done by OCBC. We have also added some recommendations of what we think you should be doing in trying times like this.
1. Change In Saving Habits
OCBC found that only 30% of respondents have enough savings to last for more than 6 months if they were to lose their jobs now. This exposes the lack of saving habits of Singaporeans, contrary to popular belief that Asians are savers. Not just that, the survey also found that 55% of respondents have reduced their savings, compared to pre-Covid period.
What should you do: If you are facing a temporary rough patch, by all means, cut back on your savings just to tide through this period. If you expect the rough patch to last longer, you might want to review your spending habits. For instance, if you own a car, perhaps you want to reconsider whether you still need or can afford the cost of car ownership.
For the remaining 27% who are looking to increase your savings, one good tool you can leverage on is savings plan. Savings plan lets you build up your savings by instilling a savings mindset in you.
2. Cutting Back On Investments, Retirement Planning
Another finding from the OCBC research shows that 40% of participants are thinking about reducing investments in the next 6 months. Some of the participants are also thinking about reducing funds for retirement.
What should you do: When thinking about retirement planning or investments, you should understand that you need to have a long term game plan. That’s because retirement planning and investments are part of your long term financial planning which accumulates with time. Taking a pause now will mean that you will need to work much harder in the future to cover the gap.
Before you make the move to reduce your funds for retirement planning or investments, make sure to speak with your trusted financial advisor. Seek his/her advice on how you can better manage your current financial situation while still stay on course for your retirement planning or investments.
3. Increasingly Worried About Insurance Coverage
According to OCBC’s research, the Covid pandemic has led to increasing worries about whether your insurance coverage is sufficient. 4 out of 10 participants surveyed acknowledged that they are worried that they might not have sufficient insurance coverage. Yet, at the same time, 12% of existing insurance policyholders are contemplating whether to reduce or terminate an existing insurance plan.
One reason is because of the financial impact of Covid on your income. While you might be worried about your insurance coverage, the loss of income could deter you from addressing your lack of insurance coverage.
What should you do: If you are in a dilemma on what’s the next step you should be taking, then it’s best to get trusted advice from a seasoned financial advisor. With his/her experience, he/she can guide you on what’s the best move to make.
Reach out to us and we will help you do a thorough financial portfolio review for free. Through the review, you can learn more about the key aspects of your financial portfolio to help you keep your insurance premiums within budget.
Turning Crisis Into Opportunity
Besides the findings from the OCBC survey, there could be other ways that Covid-19 has impacted your personal finance game plan. Rather than stress over it yourself, seek professional help with our team of trusted financial advisors
As the Chinese saying goes, a time of crisis is also a time of opportunity. Take advantage of Covid-19 to realign your financial plan to meet your current needs and financial aspirations. Together with the Synthesis team, we will help you devise a suitable financial plan that can meet your needs and aspirations.
All opinions expressed here are of my own and do not reflect that of Infinitum Financial Advisory Pte Ltd (“Infinitum”). Infinitum is not responsible nor liable to any party for the content of this [article/presentation/website/blog/ Facebook] and intellectual property used on this platform. Information and opinions provided do not constitute an offer, recommendation, solicitation or advice to buy or sell any product(s); you may seek personalised financial advice to determine product suitability.