COVID-19 has affected every aspect of our lives, and the worst bit is that no one knows precisely when the pandemic will all end. That being the case, you can look for a silver lining in this whole crisis.
And one of them is taking advantage of this self-isolation to gain financial independence. So, how do you go about it?
First, you have to acknowledge how spending money has changed. For example, pre-COVID-19, most of us spent thousands of dollars on our commute to work, child care, dining, entertainment, gym, shopping, health, and beauty among other things.
However, with the new normal, we’re spending most of our money on groceries and utilities. Overall, there has been reduced spending.
If your income has not been vastly affected, you can take advantage of this isolation to gain financial independence. The following are five simple ways you can get started:
Create a COVID-19 budget
During this time, you must make a budget that works for you. To begin with, you will need to calculate how much income you have as of this time. Once you have this critical information, write down your essentials for this moment.
This will usually include groceries, rent or mortgage payments, loan payments, and utilities. We recommend allocating about half of your income to go towards covering these essentials. You can then have 30 percent cover your wants and finally 20 percent to go to savings.
Start your emergency fund
COVID-19 has shown us, more than ever, that everyone needs an emergency fund. Crediful advises that for you to build one, you should first calculate your living expenses for every month and multiply it by six months. The amount you get is what you need to put into your emergency fund.
You can make this easier by setting a goal for yourself. For example, you can purpose to save $1000 in the next three months. Break this down into smaller and more achievable chunks of money, say depositing at least $100 every week into your fund.
While at it, put your money in a high-yielding savings account with an impressive annual percentage yield (APY) on deposits instead of using traditional savings accounts.
Pay off your debts
You can use this opportunity to take stock of all the debt you owe people and financial institutions. Line them up as credit card debt, student loan debt, mortgage debt, etc. Afterward, sort them out in terms of interest rates.
Based on this information, start paying the one with the highest interest rate and pay the minimum balance on the others. The good news is that most lenders are open to helping borrowers restructure their debt at this time.
Something else worth noting is that all federally-held student loan payments have been temporarily paused until September. As such, you can redirect that money to pay off other debts in the meantime and gain your financial independence.
Sort and sell your junk
With some extra time on your hands, now is the time to declutter and sell off things you no longer use at home. To make this process easier, we recommend using the KonMari method of decluttering.
Once you’ve identified all the items you no longer want, take clear pictures of them and list on Craigslist, eBay, Amazon, or Facebook for selling. Any extra money you make here can go towards your emergency fund or use it to pay off some of your debt. This will go a long way in building your financial independence.
Grow your income
Even though the economy is on a slowdown, you can still try to look for a part-time job or go the freelance (try https://www.writingjobz.com/) way to make a side income. Grocery stores and pharmacies are busier than ever and need all the help they can get. Look up these places and see if you can get a part-time job with them.
On the other hand, if you have a skill you can sell online, this is the time to maximize it. Start a freelance business in fields like graphic designing, writing, web development, or translation. An excellent place to start is to open freelancer account on popular websites like Fiverr and Upwork, where you can begin to work immediately.
The additional income you earn here will go a long way in helping you gain financial independence.
COVID-19 hasn’t been kind to most of us. However, you can still come out of it winning if you’re purposeful about how you spend your isolation moment. Using the five strategies we’ve discussed here, you can use this opportunity to grow yourself and gain more financial independence.