The COVID-19 pandemic has brought with itself uncertainties and confusion as to what the post-pandemic world would look like.
While we can all agree on the fact that people have to make sure they keep their financials strong during the crisis, it can sometimes feel easier said than done.
People tend to make bad financial investments during crises and this is exactly the behavior we want you to resist. In this post, we are going to talk about the financial mistakes people make during a crisis like the COVID-19 pandemic.
5 Stupid Financial Mistakes People Should Avoid in the COVID-19 Pandemic
Here are the financial mistakes people should avoid at all cost during the coronavirus pandemic.
Making fear-based financial decisions
Fear is one of the most common drivers during a crisis. It largely affects how you think about your money and what you are going to do with it. People are taking mortgage holidays or swapping their money to a KiwiSaver fund. Don’t rush into making such a financial decision. Fear is temporary. The mistakes you commit today will have a long lasting effect on your financial health.
Spending all of your income
It’s true the people have started to spend less during the lockdown. What this does is that it helps people save more and utilize the savings to reach their financial goals. It is highly recommended that you develop 90-day savings goals. Don’t waste away your money on unnecessary purchases. You don’t know what the future has for you.
Not consulting financial advisors
Your financial decisions should not be erratic. You must have complete support of your financial advisor. Your financial advisor is a professional who understands how the market is going to play out in the near future. If you are not taking financial advice, you are making a huge mistake.
Take mortgages that are too large
Don’t do it. No matter how lucrative the deal looks, there’s no point in carrying extra burden when the future of the economy is still uncertain. Take on a lower mortgage and ensure that you pay the debts at a rate you’d do if you took a bigger mortgage.
Selling assets in panic
Panic-selling is not going to take you anywhere. It is highly recommended that you hold on to the shares you have for at least three more years. Every downturn in the economy is followed by recovery. So, don’t panic sell during the COVID-19 pandemic.
It’s easier to get carried away by the fear of losing money during a crisis. We highly recommend you to communicate with your financial advisor about what you are planning to do with your money. We don’t want you to make mistakes that you will regret in future. Have questions? Feel free to put them down in the comments section!