Contrary to popular belief, financial planning doesn’t revolve around making more money and supplementing your earnings with multiple income streams. Generating various income streams by taking side-gigs always helps, but financial savviness boils down to spending less and saving more. An efficient financial plan gives us control over our future, serving as a roadmap to achieve our wealth-generation goals.
The pandemic has engulfed households and communities worldwide with unprecedented economic turmoil and financial hardships. The rising inflation and lingering unemployment trends have negatively impacted the spending power of millions worldwide. Financial planning is of utmost importance to emerging out of the pandemic with sound financial health in such chaotic circumstances.
Keep reading to explore the benefits of financial planning while surviving a pandemic.
Building a Sizable Nest Egg
We live in uncertain times and are constantly alarmed by news of crashing stock markets and plummeting currency values. The pandemic has dramatically increased online buying, with people splurging on non-essentials and luxury items. Financial experts advise households and individuals to save their money instead of spending it on luxuries.
It’s pertinent to understand that growing your savings will help you improve your life quality and invest in your future. In contrast, splurging your wealth on vintage tarot cards or exotic carpets on Amazon won’t contribute to your financial health. You may believe that your buying power impacts your life quality, but that’s not true. It’s a belief we’ve fed ourselves, inspired by the capitalist system and advertisers’ persuasive prowess.
Our savings determine our life quality because they empower us with choices for a wealthy future. Savings lie at the heart of financial planning during the pandemic to create a sizable nest egg for the post-pandemic future. You can invest your savings in a hefty down payment for a new home, an auto loan, or even start your own business. Savings create a financial cushion, empowering us with options to embark on pursuits we’ve always wanted to achieve.
Financial planning lies in saving more and spending less for a wealthy and financially sound future. For some, these pursuits include higher education without financially crippling student loans or starting their own business. Others dream of using their savings to achieve their dream of homeownership in the mountains or a seafront property in Florida.
Financial Preparedness for Emergencies
The COVID-19 pandemic has overwhelmed us with rising uncertainty, and its variants keep evolving and returning with stronger waves. Governments worldwide struggle between implementing and relaxing restrictions to curb the virus from spreading. Businesses are struggling to recover from the COVID-19 spell of social isolation while consumers feel safer within their homes. In such uncertain times, it’s crucial to create a financial plan to build preparedness for emergencies.
Most households are concerned about contracting the coronavirus, but other illnesses also rise steadily. Emergencies come in all shapes and forms, such as flooding, healthcare concerns, roadside accidents, and weather hazards. Suppose a family member in your home is diagnosed with a terminal illness, like cancer or diabetes. In that case, your financial plan will help you create a cushion for unexpected medical bills.
Imagine another scenario: you experience severe water damage or flooding in your home. In that case, a financial cushion will help you undertake renovations and temporarily relocate your family to a safer space. Emergencies always take us by surprise, but you can reduce the element of surprise by handling the situation efficiently. And this efficiency requires a large sum of money.
Investments to Improve your Life Quality
Modern-day innovations add comfort and convenience to our life quality, giving us a healthier and more fulfilling lifestyle. We all want to invest in state-of-the-art appliances, Smart TVs, recently released smartphones, and home gadgets. Investing in devices, appliances, a new car, or a new home adds quality and comfort to our lifestyle. But these investments demand financial savviness, planning, and savings.
You can invest in gadgets, tools, and equipment to enhance your comfort or make your workplace more innovative. Some people dream of replacing their secondhand car with a new vehicle without a hefty debt. Others dream of buying a PC, a camera, or taking a dream vacation. Saving a certain amount of your monthly income will increase your buying power to make sizable investments.
All these investments that we aspire to make are tied closely to our buying power and saving ability. Forgoing present-day purchases for the future isn’t easy, but it gets easier once we focus on the future.
Achieving Sustainable Financial Independence
The coronavirus pandemic has taught us how to live with uncertainties and understand the chaotic order of the world. It has taught us that our lives aren’t stagnant and that unexpected events can force uncomfortable transformations, compelling us to adapt. Most importantly, the pandemic has made us value the significance of sustainability and financial independence.
Financial independence is a comfort that allows us to look after ourselves, even if we are physically or emotionally incapable. Achieving sustainable financial independence is a long journey that demands forgoing present-day comforts for the future.
You don’t have to reduce your life quality drastically to save up your entire monthly income for the future. Instead, make a smart financial plan that allows robust life quality and economic independence for a healthy, empowered future.
Creating a financial plan will help you make the most of your income without the need to supplement your income streams. It all boils down to spending efficiently and saving regularly. If you’re struggling to make a realistic financial plan, it’s wise to consult an advisor to help you map your goals.