There is nothing to fear but fear itself- Franklin D. Roosevelt.
The fear of coronavirus dare I say, is the beginning of wisdom. But at least the government is doing something right? And it looks as though with the help of private and religious institutions, we might just be alright after all.
But what about you and I, the people of everyday? Among us are shop owners and shop keepers, be it for a tech startup or the stall at Mile 2, selling pepper, our stomachs are affected nonetheless.
And you might ask, what will happen to my money in all of this? For the sake of yourself and your dependants, you must know these three things about your finances to get through the pandemic.
- Your Liquid Net Worth
- Your Sustenance Score
- Your Contingency Plan
1. Your Liquid Net Worth
This is a sum of all your cash in the bank, short-term investments, or any assets that you can quickly convert into cash.
How do I know my liquid net worth?
If you have an android phone, go to Google Play and download *REACH expense tracker and money manager*. Scroll to Plan & Invest, and finish your setup. Your Liquid Net Worth will be calculated in under 30 seconds.
How does this help me?
Learning your liquid net worth is an eye-opener. It can spell doom or hope for you.
It forces you to re-evaluate your expenses vs your income and ask the tough questions about what you’re really doing with your life and career.
If you had to liquidate your entire estate because of one emergency, your liquid net worth is all that matters.
2. Your Sustenance Score™
Reports of the coronavirus outbreak currently does not show the curve flattening. Who knows for how long this will last. But at least, you can know how long your current cash in the bank can last you if things go awry.
Your Sustenance score is the number of months your liquid net worth will last you considering your typical monthly spend, with no income.
How do I know my Sustenance Score?
If you have learned your liquid net worth from the app, your Sustenance Score will be computed using that figure. On the net worth page in the REACH app, scroll to see how many months your pocket will last you.
How does this help me?
No one wants to become a burden to others, especially when you know they have their own s#*t to go through.
If you earn 60,000 Naira monthly but your lifestyle sees you spending 75,000 Naira monthly, you can bet that your sustenance score is in the negative. It means that if you lose your job as a result of the lockdown, you will have nothing to sustain you. But, we bring a message of hope to you.
You are undeniably going to have to make some adjustments. The goal is simple- divide and conquer. Adopt a budget based on an amount you know can take care of your basic needs in these times. Do this, to make your money last longer, and your sustenance score go higher, before they call you to say grandma has swallowed razor.
3. Your Contingency Plan
Is there truly a foolproof plan? We’d love to see that 8th wonder of the world. Three days ago, President Donald Trump signed the historic $2 trillion coronavirus relief bill after congress passed the bill. That’s a pure example of a Plan B.
A contingency plan can be referred to as “Plan B,” because it can be also used as an alternative for action if expected results fail to materialise.
How do I come up with a contingency plan?
So you don’t have one 2 trillion dollars that you’re not using somewhere. What do you do?
Each plan is unique to each person’s situation. Do you have dependants, obligations, kids? Is it a one income household? All these factors come to play in coming up with your contingency plan. However, we can all start from the little things and customise as we go along…
- Do you know the kind of emergencies that can destabilise your life if they happen? Job loss, illness, death?
- Do you know what glass to break in case of emergency? Emergency funds, liquid assets?
- How can you earn more money for your household in case of emergency?
- Who is in your support system?
…And so on and so forth. If you have little ones, it becomes all the more important to have a Plan B. With all your findings, create a table and enter all the things you’ve considered and written down. It isn’t one-off either. Your income level can experience an upturn or downturn, so keep your plan in periodic review.
How does this help me?
It is pretty simple actually.
…A personal contingency plan will reduce panic, stress, and confusion while putting you ahead of the curve, of those who leave their finances to chance.
In the business of keeping spirits up, keep watch for a new helpful article in a couple of days… “What to do with your savings in times of uncertainty”.
Stay safe and thanks for reading.