I asked a friend of mine why he never did a budget. He responded, “I don’t have the time. I work and travel constantly, so I don’t have the time to plan and arrange my affairs and do a budget.”
Well, to my friend (and I know he is reading this), you now have time. The Coronavirus disease (COVID-19) has shut down all economic activities across the entire world; Wall Street and Main Street are shut with everyone sheltering in place.
What can you do in 7 days while at home? A lot.
Review your finances
There are three main books of account for personal finance:
- Expense account: To track daily spending.
- Budget: That tracks projected and actual income and expenses.
- Net worth statements: Tracks snapshots of assets and liabilities.
This stay at home is a great time to review and plan out your expenses, budget and net worth. Pull up the 2020 budget you planned; have you kept to it? Where have you gone over your limit? Have you made more income? Investing less? Do a full audit and then recast your budget for the rest of the year. Clearly, whatever you projected must be amended to consider the new economic realities.
If you did not have an Emergency Fund, you now see the wisdom of having one; put that in your budget.
Your net worth statement needs updating. If you own a small business, sales may have suffered and taken a hit; correct for this. What about liabilities? Do people owe you? Can they pay? Will you be able to meet your own obligations? In summary, the 2020 outlook has evolved, so let that reflect in your financial plans.
Review your retirement plan
If you had a portfolio with variable income, especially shares, the fall in markets across the world has definably affected your portfolio and your retirement. The fall in your portfolio valuation may result in you missing out on your target investment amount, meaning you either must raise your contribution limits, or work longer. You must!
There are many apps online that allow you calculate how much you can expect to make in retirement; I like the Bankrate® retirement calculator. You simply get your latest RSA statement, plug in starting balance plus annual contributions (including Additional Voluntary Contributions), and agree your retirement age. Very importantly, select the ‘tax is deferred’ box and if you make payments to match inflation, also check the button. Finally, feed in the inflation rates and expected rates of return. I like this tool because it brings into prominence the effect of inflation to your RSA. The result is presented pre and post the selected inflation rate. This is a great exercise and important insight to have well before you retire.
Go to school, learn a new skill
Go back to school and develop yourself professionally. Learn a new skill, and update yourself. Online education has never been easier to accomplish than today. With good internet connection, you can go to top education sites like Cousera and pay to get a professionally recognized certification for a short program. Examples are Python basics by the University of Michigan or Social Media Marketing by Northwest university.
These courses are free and there are many more out there.
Globis University is recognized as the largest MBA provider in Japan through its English and Japanese MBA programs offered in different formats. It’s also offering free courses until the end of April.
Start a business
Or at least draw up a business plan for a business. Take to time to put your thoughts on paper.
What problems can you solve? What service can you perform better? What skills can you outsource?
These are all business ideas, but take these ideas and put them into a document until you can raise funds and operationalize.
Health is wealth, they all say. Take time out and rest. Rest your mind and body. Eat healthy, sleep early, chill. If you live in Lagos, it’s normal to wake by 4 am and sleep by 11 am as you navigate traffic. Don’t feel guilty in simply watching your favourite tv shows and laughing out loud. Make a deliberate effort to break your usual monotony, read a book on love, cook for someone, get your body ready for the coming months which will require more effort to catch up. Give back by helping someone out. There are people out there that are broke and cannot afford to buy food; be that help.