The coronavirus pandemic has wreaked havoc on economies and severely disrupted the lives of people, globally.
As of June 2021, the coronavirus has claimed around 3.7 million lives, infected roughly 172 million people, and the coronavirus-induced shutdowns rendered millions of people jobless and bankrupted many businesses. Schools and educational institutions - both public and private - were forced to go into lockdown, resulting in layoffs of thousands of educators.
To get out of the financial abyss, teachers - or any other professionals - who have lost their jobs during the outbreak need to take some emergency steps that we will discuss in this article.
1-Utilize unemployment benefits
If you are among the unfortunate who have been laid off, you can utilize unemployment benefits offered by the government to keep some income flowing into your bank account and save yourself from more severe financial difficulties.
Many governments across the globe have announced Covid-19 relief packages for employees who have lost their jobs, so unemployment grants can provide you with the much-needed cushion when you are in financial distress.
The US Congress passed a new stimulus bill that allows penalty-free withdrawal from your 401(k) or 403(b) account, which is a huge relief for the laid-off professionals who are in desperate need of money to survive the unemployment period.
So, if you are in a position to decrease you retirement account, you can consider this option to alleviate financial suffering. Keep in mind, these withdrawals are considered normal income so you'll still have to pay taxes on it.
2- Reduce your expenses
The most obvious thing you can do in the event of losing your job is to reduce your expenses.
You can use an expense tracking app wherein you can record your daily expenses, which will help you determine the areas where you can curtail your expenses and save some money - as the saying goes "A penny saved is a penny earned".
While some of you might think that saving little money won't make a difference, you will be astonished to see how much money can be wasted on items you don't realize you can survive without.
Some possible expenses you can cut include dining out, entertainment expenses, buying gadgets, and entertainment subscriptions.
3- Refinance your debts
Due to the pandemic, central banks across the globe have drastically reduced interest rates to spur investment and provide cheap access to credit.
Since the primary purpose of refinancing a loan is to lower your interest rates, you can greatly benefit from the low-interest-rate environment by refinancing your debts.
The lower interest rates will help you save money over the life of the loan. However, there are refinancing costs involved, other terms and conditions, plus a strong credit score is needed, so you should include these while contemplating refinancing.
4- Provide tutoring services online to earn some cash
The pandemic has shut down schools and universities as most of them now focus on distance learning and online classes using video conferencing platforms.
As a teacher, you can advertise your services on various platforms and conduct online learning sessions for a fee. Many businesses such as Walmart and Target have shifted to online delivery due to restrictions on physical interactions during Covid.
You, too, can take your teaching skills online and start earning even during the pandemic lockdowns like other businesses are doing.
5- Debt consolidation
Taking advantage of the low interest rates during the pandemic, you can consolidate your debt by taking out a new debt equal to your combined existing loans at lower interest rates.
Suppose, you have multiple outstanding loans totaling $10,000 on which you pay interest at 16% annually. Now, with the interest rates at their lows and if you qualify, you can acquire a new loan of $10,000 at a lower interest rate to pay off your old loans and lower your periodic and cumulative interest payments.
This will allow you to save money on interest payments while managing your financing during critical times in the pandemic.
6- Negotiate for deferring your bills or rent
Acknowledging the financial difficulties of the masses resulting from economic shutdowns, most countries worldwide have introduced several temporary measures that allow tenants to defer their rent payments for a few months, providing much-needed financial relief to out-of-job educators and other professionals.
Similarly, you can talk to your service providers for deferral or partial payment of your bills without penalty, which is never guaranteed but doesn't hurt to ask.
If you have a good payment history and are a long-term client, your service provider can allow you to defer your bill on partial or no payment.
7- Utilize Covid relief packages
As the world grapples with the pandemic, countries are churning out new relief packages to keep the public from negative financial consequences.
You should keep yourself updated about any new relief packages that can help you recover from the negative fallouts of the coronavirus-induced shutdowns. Studies have shown that the relief programs doled out by the governments have proven to be largely effective in providing relief to the citizens from the financial crunch.
8- Take a loan from a friend
If you find taking personal loans from banks and financial institutions difficult for whatever reasons, you can potentially ask friends or relatives - who are fortunate to continue with their jobs or are financially well off - for a loan to meet your expenses during the pandemic or lockdown period.
Once the economy recovers and the pandemic-related restrictions are eased, you can return the loan amount as you get back to work.
You can pay no to very little interest on loans taken from your relatives or friends, but make sure to pay the loan off as soon as possible - it's not worth letting a financial setback affect your personal relationships. Communication is key here to make sure whoever you borrow money from knows when they'll be paid back and how long it might take. Even a backup plan isn't a bad idea, just in case repayment doesn't go according to plan.
9- Consult a financial advisor
To make a financial plan for managing your finances during Covid, you can consult a financial advisor who can give you personalized financial advice after reviewing your current financial condition and your short and long-term financial objectives and goals.
A financial advisor can help you create a customized plan and stay accountable to it. Plus they can help make sure you aren't missing any key areas of your financial life or recovery opportunities.
10- Be cautious with your credit card
It can be tempting to defer or partially pay your credit card outstanding balance, but the interest rate charged on credit cards is exorbitant and can quickly accrue to become unmanageable.
You should always pay your credit card outstanding balancing in full and not leave any outstanding balance so that interest is not charged.
You should stay away from using your credit card for cash withdrawal as you will be charged interest starting from the day you make your withdrawal.
11- Prepare for the worst
While it is important to manage your finances to withstand the Covid pandemic, you should regularly save and invest to build emergency and retirement funds so that you can use those funds in a situation or unknown circumstance life throws at you.
If you remain disciplined and invest regularly, irrespective of market conditions, the long-term results can be worth it.
The pandemic has ravaged the economies around the world and has affected every individual in one way or another. Whether you are a teacher or any other professional, you can emerge financial stronger from the pandemic than when it started, if you prepare for the worst but hope for the best.
If you manage your finances - as we mentioned in the article - you can be in good shape and remain on track to achieve your long-term financial goals while still overcoming the short-term hiccups like those of the pandemic.