Financial Planning, Budgeting, Money Management, Perencanaan Keuangan, Pandemi How Do You Manage Money During the Pandemic?

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The COVID-19 pandemic has exerted an extraordinary amount of pressure on many of us. As economies tried to grapple with recovery and businesses try to survive, many people lack job security, received lower wages, or were even made redundant.

For sole family breadwinners, this puts a toll on their livelihood and has impacted their way of living. This has also led to new challenges around personal financial health and money management.

There are some basic money management strategies that you can take in order to effectively plan for yourself and your family during this time of uncertainty.

1. Don’t bite off more than you can chew

One way to manage your money wisely is to keep track of your budget and ensure you spend only what you earn.

Start by creating a budget to regularly record your income and your monthly spending. This allows you to have visibility over your monthly net cash flow. Without good budgeting, you will never know how your money is spent for each month. That is why sometimes you might feel like your monthly income is all spent before the next pay day.

Your net liquidity is the cash generated by subtracting your spending from your monthly income. A negative net liquidity shows that your spending is greater than what you earn in that particular month. It is then a good time to look at your monthly spending and consider whether you need to make changes to your lifestyle and how you use your hard earned money, without sacrificing your basic needs or mandatory spending, such as for rent and food.

2. Emergency fund is a must

A savings fund is very crucial to cover your emergency needs. This could come in various forms, such as an unplanned need to fix your house, replacing a worn-out automobile part, or even to temporarily cover your daily needs should you lose your income.

The size of your emergency fund may vary, this will depend on your own spending and how many family members you are responsible for. For those who are still single, the ideal emergency fund size would be at least three months’ worth of expenses. But for those who need to provide for their family members, this amount would need to be doubled or tripled.

The more family members you need to care for, the bigger your emergency fund should be. During this time, it would be smart to put more cash towards your emergency fund account with at least six to twelve months’ worth of regularly expenses just to err on the side of caution. 

3. Allocate some budget for risk management

There are other risks that may emerge in your life that even an emergency fund cannot cover for. In the unfortunate case where you are unable to earn an income, due to permanent disability, critical illness or even passing away prematurely, your loved ones who you used to provide for might be faced with a predicament.

A life insurance will help protect yourself and your family when you pass away. The plan will grant an up-front amount to your family so they can continue to be provided for even in your absence.

For sole family breadwinners, there are always a looming risk that health issues might arise due to their busy lifestyle. If they are struck down with a life-threatening disease or critical illness, the treatment can be expensive and be beyond you and your family’s earning capacity.

Having a BPJS Kesehatan (government-run health insurance) and a private health insurance can support you through that situation. Health insurance reduces the financial risk related to medical expenses and transfers them to the insurance company.

4. Start to invest only when you are ready

Investing your money in one or more investment instruments in the hope of a handsome return is a good way to increase your wealth. Investing is one of the most effective way to reach your financial goals, whether it is a short, middle or long-term goal. However, investing has its risks and you should have adequate financial and health protection to ensure you have a safety net for you and your family.

Having financial protection means saving up an emergency fund and appropriate health and life insurance. It is also best to try and keep your debt level at a reasonable amount. Before you invest, you also need to make sure you are aware of your own risk profile, your investment goals and financial horizon.

The shorter the horizon, the lower risk instrument you could pick, such as time deposit. For the middle term, you could look at moderate-risk instruments like fixed income mutual funds.

The longer your financial horizon, the more flexible you can be with your investments. You could consider putting your money in high-risk instruments like stocks, or even non-liquid assets such as property.

These are some money management tips and strategies you can consider during unprecedented time. It is important that you control your spending and take careful consideration before you make important decisions that may affect your financial health.  

This article was written by Aulia Akbar CFP®, Lifepal Financial Educator and Researcher, as part of a collaboration with

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