Improving Financial situation
Student’s Name
Instructor’s Name
Date
The current outbreak of covid-19 has affected all economic sectors apart from, hopefully, safety and solace of our homes. If the virus strikes a member of our families, the homes are affected too. The financial sector has not been left out since over 5 million businesses have been closed due to the pandemic (Fernandes, 2020). This paper tries to convince my friend Mary on the steps she can use to improve her financial situation amid Covid-19 disease.
Mary should stretch her savings further by avoiding non-essential spending from her budget. A potential effect of the pandemic is that she might be required to stay home for some time (Fernandes, 2020). If that happens, she may lose her income for that period if her employer doesn’t provide paid leave or the opportunity to work from home. Instead of panicking, she should focus on ways of stretching her money, such as avoiding unnecessary pending from her budget. She should save the money that she spends on travelling and eating out because she will be staying at home more.
I would also advise Mary to take stock of what she already has at home before giving in to buying everything. People are emptying daily essentials like toilet papers and food from shelves all over the country. She should avoid spending her money buying groceries, medicine, and food items to stock them up because of fearing lockdown measures. She should only buy the essential things, and daily use items as panic buying may restrain her finances.
Mary should adhere to her investment plan even though the stock market has become increasingly volatile due to the effects of the virus. It can be tempting to sell her stock during this pandemic, but that is not a wise idea right now as choosing to sell stocks now could lead to a realized loss of a lot of money. The stock market will likely recover, and she might regret selling her stock at a loss. She should assess her investment plan and be willing to adhere to it to avoid anticipated losses.
Mary should take an insurance cover because instances and situations such as Covid-19 can occur at any moment. She should ensure that she has a proper health insurance cover and check her health coverage benefits to understand how much it may cost her in case of a critical illness of the disease. She should even consider increasing the premium amount by expanding coverage to benefit her in case of a health crisis (Baker, Farrokhnia & Yannelis, 2020).
Mary should avoid unnecessary spending by differentiating between needs and wants to make rational spending choices. Needs are the items that she cannot survive without such as clothing, shelter, food and healthcare while wants are the items we would love to have but we do not need them to survive (Fernandes, 2020). For example, Mary wants to buy a luxury car edition SUV, whose cost is almost twice of an ordinary car, to get to work. She should consider purchasing a cheaper car or using cheap, Uber services. She could use the difference in cost between luxury the SUV and a more economical car for basic needs such as saving for emergence.
In conclusion, the covid-19 pandemic has immensely affected all aspects of our daily lives. We should stretch our savings further; prioritize our needs to wants to avoid non-essential spending. We should also stick to our investment plans and refrain from panic buying as the economic situation is likely to recover. An insurance cover is another step of improving our finances in case the pandemic strikes a member of our families or us.
References
Baker, S. R., Farrokhnia, R. A., & Yannelis, C. (2020). How does household spending respond to an epidemic? consumption during the 2020 covid-19 pandemic (No. w26949). National Bureau of Economic Research.
Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. Available at SSRN 3557504.