Financial wellness in times of a pandemic

02 JUNE 2021

By James Patrick Q. Bonus

As of June 2, 2021, the Philippines has recorded more than 1.24 million confirmed cases of Filipinos positive for COVID-19, 52,000 of which are still considered active. These numbers remind us that while the quarantine measures implemented since last year have largely been helpful in preventing the rapid spread of the virus, all of us should all continue to practice protective measures, such as proper wearing of face masks and shields, frequent hand washing and disinfecting of belongings, and maintaining safe social distance, among others, as our part in controlling the pandemic.

We agree that these measures are important to protect our physical health. But what about our financial wellness? What can we do for us to be healthy financially in this time of a pandemic?

We can find the answers from the same measures provided by health officials, but with a twist: Similar to wearing masks, we should protect ourselves, our loved ones, and our assets against financial risk. We should simplify our lifestyle to reduce excesses that drain our funds, the same way that hand washing and sanitizing clears out harmful bacteria and virus from our hands and belongings. And much like social distancing, we should invest to distance ourselves from our current financial standing towards a better tomorrow.

Protect yourself

We can protect ourselves, our loved ones and our valued assets in two ways: by building up our savings and through obtaining insurance.

In order for us to build our savings, we must first focus on maintaining regular net positive cash flows, be it coming from our salaries or from our businesses. This requires prudent re-evaluation and rationalization of our expenditures, identifying which ones are truly essential, and discontinuing the avoidable expenses. Cash savings generated through this financial pruning exercise, coupled with a pursuit to maximize earnings should allow us to set aside funds as a buffer for future situations such as unbudgeted purchases or disruption in cash inflows.

Ideally, our savings buffer should be at least three to six months’ worth of essential expenses.

Obtaining insurance coverage for ourselves and our loved ones’ lives and health, as well as on our properties, is like entering into outsourcing agreements. For a relatively small fee, we get to outsource to our trusted insurance provider our worries and anxieties about all financial risks and perils on our lives and assets, freeing up more of our energy and focus and unburdening our minds so we can focus on what matters most in our day-to-day lives.

Having insurance is also like having leverage, where we get to do more with our assets by worrying less, because we know our trusted insurance company will cover for us in times of need when something untoward happens.

Simplify your lifestyle

The ongoing pandemic and the resulting quarantine measure has forced most of us to remain at home, which gives us an opportunity to re-evaluate our lifestyles and focus on what is truly essential.

Marie Kondo said in her book The Life-Changing Magic of Tidying Up, “…discard everything that does not spark joy.” We can apply a modified version of her advice to our financial well-being, discarding everything that does not add value, like items that we deem as non-essential, from our spending and lifestyle habits.

For those struggling with a lifestyle built on debt, we can start by admitting to ourselves our current situation, make a full accounting of our financial obligations and proceed to pay down systemically, gaining payment momentum along the way, with a goal of further reducing, if not outright eliminating, debt from our lives.

Invest for tomorrow

Investing has always been critical in ensuring financial well-being, with or without an ongoing pandemic. Decisions to invest now in ourselves and in financial assets allow our future selves better choices and expanded financial capabilities.

Investing in ourselves include dedicating more time, effort, and money towards self-learning and development, such as attending webinars, purchasing and reading books, or even joining and participating in cause-oriented movements. Likewise, investing in activities that can generate lifelong learning and valuable experiences, such as actively contributing and participating in professional associations, or setting aside time and energy on side projects and gigs, can prove valuable in building our intellectual and experiential capital that we can bank on for higher cash flows in the future.

The pandemic has depressed asset prices in financial instruments such as publicly traded stocks and mutual funds. Now is a great time to evaluate and invest your available funds through bargain hunting undervalued stocks with significant upside potential that can be realized once the pandemic is over.

We continue to wish everyone health and safety in these trying times. Please remember to always wear face marks and shields, to frequently wash your hands, to sanitize your belongings, and to keep a safe distance from others. Protect yourself, your loved ones, and your assets through savings and insurance. Simplify your lifestyle by reducing non-essential expenditures and reducing reliance on debt, and invest for a better tomorrow, in financial assets and most importantly, in yourself.

James Patrick “Japs” Q. Bonus is a Executive Vice President and the Chief Financial Officer of Etiqa Philippines.

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