How not to let Covid-19 ruin your financial health

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The coronavirus has been proven to ravage human bodies. But that doesn't mean you should let it threaten your financial wellbeing too. Here are six ways you can prevent Covid-19 from ruining your financial health.

Get a refund on your travel spends

When the seriousness of Covid-19 became clear, many found themselves stuck trying to get refunds on cancelled flight tickets and hotel bookings. Between travel insurance claims and haggling for alternative flight dates (that you may have to top up even more money for!), there's another option you can try.

Check the credit card that you booked your flight or hotel with. Some credit cards, such as air miles cards, offer complimentary travel insurance at least to the principal cardholder. So if you booked your trip with such a credit card, you might want to speak to your bank about compensation.

Now, because life goes on, Covid-19 or not, future travel plans will still have to be made.

Many major hotels chains and booking sites are now offering free cancellation up to 24 hours before check in, which means you can change your plans if you need to, without penalty. Make sure your bookings include this clause.

As for plane tickets, it might be worthwhile paying extra for waiver of ticket changes. That way, you won't have to jeopardise your budget if you need to change your flight plans.

And above all else, start buying travel insurance.

Bump up your emergency fund

One of the more scary things about Covid-19 is the economic uncertainty that follows in its wake. To protect yourself and your family against short-term shocks, an emergency fund is your best tool.

Go through your expenses for items to cut, which can then go towards your emergency fund. If you have an endowment plan with a cashback option, now is a good time to exercise it.

Another way to bump up your emergency fund is to draw out your dividends from your investments. Don't forget your fixed deposits. Sure, you'll lose your bonus interest returns, but that's nothing compared to the penalties and late fees you'll get slapped with if you're late with your bills.

Your goal is to have 3 to 6 months of expenses saved up and liquid - this means stored in a bank account that you can withdraw from anytime, and preferably separate from your regular bank account.

Consider getting a line of credit

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Another thing to consider is to open a line of credit, which offers you credit when you need it, but costs very little to maintain otherwise.

Typically, credit lines charge an annual fee of between $60 to $120. They offer up to four times your monthly income in credit, and you have a high degree of flexibility in how you pay off what you borrow.

Certain banks even allow you to restructure your debt into personal loans with lower interest, further helping you manage your finances.

Why credit lines and not credit cards? Because compared to credit cards, credit lines offer lower interest rates and maintenance fees - and when borrowing, the lower interest rate, the better.

(Also, credit cards are NOT for borrowing money! If you find yourself treating credit cards like flexible loans, you should probably speak to a credit counsellor before you find yourself in trouble.)

If you're thinking of getting a line of credit, act now. It'll be much easier to get your application approved while you're in good financial standing, but harder to qualify if your credit rating has taken a hit because you've not been keeping up with your bill payments.

Calm down about your investments

Yes, there is turmoil in the markets, and it's probably a good time to take a closer look at your investments. However, the worst thing you can do is to panic and make rash decisions.

By all means, continue to watch for developments and make informed decisions about your investments. But as far as possible, resist the urge to withdraw your investments as a knee-jerk reaction, lest you face high penalties that can wipe out years of returns.

Also, don't recklessly make changes in your investments, otherwise you'll be racking up expensive management fees.

If you're fearful, step back and remember that investing is about the long-term. This is not the first time a pandemic has shook the world. Remember SARS, H1N1 and MERS? Markets bounced back and the world went back to business as usual. Why should this time be any different?

Upskill yourself

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With businesses feeling the heat and jobs in danger, proving your worth as an employee is more important than ever.

As part of Budget 2020 announcements, the Singapore Government is giving a one-time special top-up of $500 to your SkillsFuture account (remember that?), $1,000 if you're above 40.

Now is the time to use your SkillsFuture monies and learn new skills with the goal of taking on an expanded role at your current company, or help you get hired into a new position with a new employer.

Alternatively, you can make use of the opportunity to pick up a skill you've always been interested in, such as design or programming. That way, you can start a side gig using your new skills, which may even develop into a brand new career.

Don't waste money on dodgy or unnecessary products

Finally, remember not to waste your hard-earned money on products with questionable effectiveness, or that are even downright unnecessary.

Yes, we're talking about things like face masks (only required if you're sick, and only effective when worn as part of a comprehensive suite of personal protection equipment); and hand sanitisers (effectiveness varies according to brand, type and usage method, less effective than washing with soap and water) - in excessive amounts, that is.

Also, stay away from unproven miracle cures and magical preventions, because they are just as good as unicorns and rainbows in keeping you safe from Covid-19. More than likely, these are run by scammers looking to make a quick buck off those who are vulnerable and scared.

For the latest updates on the coronavirus, visit here.

This article was first published in Her World Online.