Planning for a rainy day

Its safe to say not many were expecting a global pandemic to the extent we experienced, but it is safe to say it has taught us a thing or two about our finances.

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Covid-19 has taught us to expect the unexpected. The pandemic sent the global economy spiraling out of control, whilst the virus infected millions worldwide. With vaccines being offered the financial world is slowly recovering. We would be naive not to learn a lesson or two.

So, what have we learned?

Expect the unexpected. Few would have expected things to pan out the way they did, but there is nothing to suggest this is our last pandemic. Another pandemic is always a possibility, although unlikely. An economic downturn is more likely, and is inevitable one way or another. There was a recession in the early 1990s and another between 2008-2009, neither of which were related to pandemics.

So, what does this mean for us? It means the average person should think differently and remain prepared.

Understand your overheads. Especially those which have to be paid irrespective of your income e.g., rent, insurance, staff wages, software and other utilities.

What we’re really saying is, you should know what your fixed outgoings are. These cannot be avoided and need to be paid as a bare minimum of your outgoings.

Know what you earn. Now that you understand your costs you should know the minimum income required too. It is also important to consider personal outgoings as part of this.

If you are unable to generate enough income through business means then it is important to prioritise your bills. By being prepared you’ll avoid further late payment costs and can potentially renegotiate loans and rent to assist through the difficult times.

Having emergency funds available is also tremendously benefiting.

Its okay to ask for help. It can be easy to assume the world is against us and wants us to fail during challenging times, but it is important to know there is always help available. It is worth knowing it is in the best interest of your government, community and employees to keep your business running.

The pandemic has taught us about the resilience of our economy, it is our job to remain upbeat and explore the right channels for help. Speak to your accountant and discuss options relating to loans, furlough and grants.

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