How to be Prepared Financially for the Next Pandemic

Looking to be financially secure for the next pandemic? 

Today, I have a great article from Neiko Johnson on how to be financially prepared for the next pandemic. Neiko and his wife paid off $240,000 of debt in 27 months. They share their finance knowledge and debt-free journey on their blog Secret to Finance. The primary focus of their blog talks about budgeting, paying off debt, money tips, building generational wealth, and increasing income with side hustles.

In today’s society, money issues have been the norm and it happens to people in every income bracket.

It is important to understand what areas of your financial plan to focus on to be financially prepared for the next pandemic. You want to be proactive and not reactive when it comes to your money and life.

First off, personal finance is 80% behavior and only 20% head knowledge. This simply means that it is critical to understand the basic principles of finance, but it is even more important to understand how to execute those principles.

Use the 3 tips below to find the right steps to take to reach financial security and live with an ease of mind when it comes to your money.

1. Get on a budget

If you are not already on a monthly budget, this is the best time to get started. Getting on a budget is one of the most important things you need to do to be prepared financially.

A budget is not putting you on a spending restriction. It is simply allowing you to control where and how you spend your money. Certainly, some people view a budget as pointless, but it is key to your overall financial success.

Follow these easy 5 steps to create your monthly budget:

1. Calculate your after-tax income

2. Calculate your monthly expenses

3. Choose a budgeting plan

4. Write it out and commit to it (your spouse too! if applicable)

5. Reconcile and revise as needed

Your income is your quickest way to build wealth. Getting on a budget takes time and energy, however, having one will be beneficial in the long run. Ultimately, knowing where you spend your money may seem like a boring task, but it helps you move towards your financial goals.

Of course, there are a lot of different budgeting methods out there. But what is important is to choose the best one that works for you.

We use the zero-based budgeting method. It helps us stay motivated and focused on what is important in our budget.

2. Get out of debt and stay out of debt

Getting out of debt is one of the most important parts of building financial security. But, to take it even further, staying out of debt is the gamechanger. My wife and I focused on sacrificing our lifestyle to make progress paying off debt.

Debt is anything owed to someone else, including student and car loans, medical bills, and credit cards. One thing to remember, being in debt will slow down your progress to building wealth. In other words, as the great Warren Buffett said, “if you take debt out of the equation, it would almost be impossible to go broke.”

3. Build an emergency fund

Having a financial plan is important but building an emergency fund is one thing everyone must do immediately. You should establish an emergency fund before paying off debt. The perfect time to build an emergency fund is before the emergency happens.

It is not if an emergency will happen, it is when. We all go through things in life and we must plan accordingly for the unexpected. I suggest starting with a smaller emergency fund of 1-2 months of monthly expenses until you are out of debt. Out of debt means, all debt paid off not including your house.

After that, increase your emergency fund to 3-6 months of monthly expenses. Build a bigger emergency fund if you do not have a secure job. Above all, think of your emergency fund as a safety net.

Final Words – how to create financial security

In conclusion, being financially prepared for the next pandemic starts with making sure your finances are in order. It is not too late to get started on your financial plan. It will take hard work, but it is not impossible.

Set your financial goals and go execute them. Start with focusing on your budget, getting out of debt, and building an emergency fund.

You are now ready to get financially prepared for the next pandemic. You got this!