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Personal finances – are you better or worse off right now?
It is safe to say that there are very few people whose finances have not been affected by COVID-19.
People that carried on working from home or where the employer topped up government payments may find themselves financially better off - by not going out, not commuting, not buying lunches...
On the other hand those that lost their jobs or who’s businesses were forced to shut are encountering losses and are likely to be worried about the future.
What about you? Where do you fall? Is this the first time in your life when you are saving money? Paying off the credit card bill? Or have your finances been squeezed to the point when you can’t sleep at night?... Do you even know?
Then there is another angle to explore. Some people (re)discovered that they like spending more time with their families, don’t miss the commute and are wondering if there is something they could do to bring more balance to their lives. Does this ring true with you too? How can you restructure your finances (income) so that you don’t have to go back to the office full time? And how to make your income more safe?
Regardless of which camp you’re in, the dependency on the one source of income may have taken you by surprise. What can be done now to improve the situation and make you more resilient in future?
More than one source.
When it comes to income protection, the established wisdom is diversification. This may sound complicated but it simply means ‘not all eggs in one basket’. Normally this term is used when talking about passive, investment income - the type that most of us aim for as we get older and move towards retirement. It will include income from pensions, royalties, rental property, stocks & shares. The term ‘passive’ describes how it works – you do nothing and still get paid.
However….. as a society we can’t live solely off passive income all at the same time. If we tried, nothing would be produced and nothing would be done. We’ll have money but nothing to buy and no-one to sell it to us. There has to be another way.
How about having a variety of ‘active’ income – income from more than one employment, from a hobby that you have turned into a small earner, from regular de-cluttering? With bits of passive income thrown in. What would your life look like?
As with many walks of life, the answer to the best combination will vary from one person to another. Someone’s ideal situation is another person’s hell. I will explore the various mixes of incomes in Part 2 of the series. In the meantime, if you have any questions or comments, drop me a line on email@example.com