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  • Writer's pictureFinancial Fortress

How to Reassess Your Finances in a Pandemic

Updated: May 9, 2022

Have you thought of reassessing your finances lately? This is something that many people should be doing because of the pandemic.

Pandemics on COVID-19’s scale can have massive and long-lasting ripples on the global economy. This means everyone is affected sooner or later, and most people have to face financial uncertainty.

In fact, even if you have a job right now, that’s little comfort. Traditional income sources are less reliable than ever, what with unemployment rates hitting highs everywhere and even solid companies going through multiple layoff rounds.

Hence, reassessing finances may be the order of the day for just about everyone. That’s because it can help you prepare for the new economic landscape… and whatever financial challenges may come in the future.

Here, we’ll take you through the steps to follow when reassessing your finances in the pandemic. Note that the same steps can be used when reassessing finances for other world-shifting events, like recessions.


Get a Grip on Your Priorities

What are your financial priorities? Your goals? Your needs as well as your wants?

It helps to make a list of these from the start. Items on the list may range from such mundane things as paying the utilities to big one-offs such as paying for a wedding or other major life events.

Once you’ve listed these out, it’s a good idea to sort them into different categories. Divide them into short-term or immediate priorities and long-term or future priorities. You may even find the need to add a category for medium-term ones!

Whatever the case, try to sort them so you know which of them have shorter timescales. Only after that should you start assigning actual priority levels: this will further refine your grasp of your financial aims.

Arrange the goals in each category in order of importance. More important goals go to the top of each category; less important ones, to the bottom.

Take note that it’s fine to split apart similar goals based on priority, though. For instance, you should generally list paying off a higher-interest debt as a bigger priority than paying off a lower-interest one.

This can help you plan your finances better, as you will have an idea of your most important expenses beforehand.

Plot Your Expenses and Cash Flow

This is a natural next step after you’ve listed your financial priorities. You need to know how much money is going out and if it’s doing so in a way that reflects your priorities.

That means this step isn’t just about learning how much you’re actually spending per month. It’s also about learning where and how much you should be spending per month.

Essentially, you need to take a look at your expenses, put them all together, and tot up the sum to find out how much money you spend each month.

Are there areas of spending where you think you may be overdoing it? Are there expenses on the list that you think unnecessary, based on your list of financial priorities?

The idea is to find out if your spending is in line with your stated financial aims. Your task is to evaluate costs to see which ones don’t make sense for your priorities.

This is a key concept in budgeting, of course. If you’ve read our guide to budgeting for fresh grads in Singapore, for example, you’d know that by now.

If you haven’t read that budgeting guide yet, by the way, you may want to check it out: even if you’re not a fresh grad, it has useful tips to get anyone started on a budget as well as financial self-assessment.

Check Your Income

Now for the part where you figure out how much money is coming in.

You have to do this for two reasons:

  • First, to see if your sources of income are sufficient for most of the foreseeable challenges the future may bring.

  • Second, to compare your total income to your total expenses per month (for budgeting or financial planning purposes).

Begin by listing your sources of income. You should consider not only the staple or regular sources of income but even the irregular ones, e.g. part-time jobs, hobby-inspired money-making projects, etc.

Now, consider whether or not any of these is at risk due to the pandemic or recession.

Take a look at the industry in which you’re working, for instance, or the state of the company for which you work. Is the industry struggling? Has the company posted drastically reduced profits?

This can give you an idea of whether or not you need to look for alternative or supplementary sources of income as fallback options. If you do, be sure to put that in your list of top financial priorities!

In any case, after this, calculate how much you’re making per month. Now you know how much money is coming in regularly.

You can subtract total monthly expenses from this figure to further clarify your financial situation. Ideally, you should be doing both of these things:

  • Living within your means.

  • Putting aside enough extra cash each month for other things that can protect your future (we’ll get to those “other things” later).

Here’s a general rule when trying to gauge the health of your finances: more cash left over each month after all your regular expenses is obviously better.

If you find yourself just barely making ends meet with little left over, you should rework your budget. Giving yourself no breathing room will leave you with nothing to fall back on if something bad happens… which brings us to the last step of reassessment.

Evaluate Your Fallback Funds

There are several funds to check here: your savings fund, your investment portfolio, and your emergency fund.

Why are they fallback funds? Because these are all technically assets you can fall back on when all the chips are down.

Ideally, only the emergency fund should be affected in such a situation, of course. That’s why it’s a good idea to focus on building up an emergency fund at this time.

However, you never know when the others may come in handy as well.

Besides, the other funds secure your future, so they’re reserves on which you can “fall back” for another situation: your investment portfolio is most likely going to be part of your eventual retirement fund, for example.

Essentially, treat all of them as necessary for your financial future. That way, you won’t have to make hard decisions like taking out second mortgages or going into heavy debt months or even years later, just to stay afloat.

Anyway, this step is not just about making sure you’re hitting your minimum deposit/balance amounts in these funds. It’s also about checking whether or not you have them set up for optimal results.

For example, are your savings in a high-interest savings account or would they be better served in another account type or even another bank?

Or is your emergency fund lodged in an account type that offers decent interest as well as good liquidity or easy withdrawal?

Moreover, is your investment portfolio in need of a rebalance or shift to other types of asset classes?

These are all questions to ask at this stage. Your goal is to assess the state of these funds and see whether or not improvements can be made to your benefit.

Optimising Your Situation Post-Assessment

After you’ve gone through all of the steps above, you should have a better idea of the state of your finances. You should also be in a better position to see how to optimise your situation.

Use what you’ve discovered in reassessment as references for your plans or changes. Refer to the list of priorities when you need “a compass”. Assess your expenses, income, and funds in light of those priorities and make plans accordingly.

This may result in a lot of changes to your financial activity. You may find yourself cutting back on certain expenses, adding to sources of income, building up emergency funds where you had none, and so on.

This is a lot of work, especially if the pandemic is already taking a toll on your life in other ways. Planning all of these alterations may require quite a lot of mental fortitude and financial acumen.

Fortunately, you don’t actually have to do it alone. For example, if you feel that you need professional help with it, don’t be afraid to reach out to us at Financial Fortress.

We can make sure you have financial advisors to guide you through both the financial reassessment and planning. Simply drop us a line and we’ll be glad to help you prepare your finances for the challenges of and after the pandemic.

Written in collaboration with our financial advisory partners at Virtus Associates.


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