COVID-19 Financial DOs and Dont's.
- Most countries are facing economic upheaval because of the Covid-19 situation, leaving individuals insecure about their jobs and finances.
- During this troublesome time, financial anxiety is increasing at a disturbing rate, making it difficult to make rational decisions regarding personal finances.
- However, smart financial decision making is necessary for everyone if you need to secure your financial future.
- Since it's difficult for most people to manage finances, here we have listed down the dos and don'ts of handling your finances during this current pandemic.
Do's of Managing Finance To manage your finances and secure your future, do pay attention to the following:
Control Your Spending Habits
- If you are feeling insecure about your finances during this financial crisis, take a closer look at your expenses.
- Limit your spending to essential things and cut down your non-essential expenses to an absolute minimum.
- Your monthly bills are essential expenditures and must be met.
- The rest can be put on stand by.
- Prioritise essential monthly expenses like power, lease, Insurance expenses, EMIs, and so on.
Audit Your Spending Plan And Other Expenses
- You, more likely than not, would have had a pre-decided financial plan for all the costs you bear.
- Considering the prevailing situations, it is essential to understand the thin line between your necessities and luxuries.
- Luxuries can wait; however, necessities need your immediate consideration.
- You should audit your spending plan and prioritise the absolute necessities like service charges, food, house lease, EMIs, credit card bills, and medicines to guarantee financial stability.
Try To Earn Some Extra Money
- Think of ideas where you can earn extra money.
- Consider selling off things you are not utilising, taking up outsourcing projects, or find a low maintenance line of work.
- The cash you'll earn from this activity might be less; however, these small amounts can add to something significant in the long run.
Drop Unnecessary Memberships
- The nationwide lockdown may have made you see Amazon Prime and Netflix memberships as a must-have.
- Be that as it may, these are luxuries, and if you are not financially secure, these are unnecessary items only adding to your financial burden.
- You can maybe stick to free media platforms like YouTube, read books as of now, and be happy with your normal DTH membership for entertainment.
- These little steps can help you save during these uncertain times.
Keep A Check On Your Life Insurance And Medical Coverage
- If you don't have any extra security or medical coverage, picking one now would be a good choice to protect you from sudden, unexpected medical expenses.
- If you have a term plan, ensure that you pay the premium on time to keep the policy from slipping by.
- Additionally, ensure that you have a medical insurance plan for yourself and your dependents, so you don't have to dip into your savings in case of a crisis.
Save Even If It's Little
- Having control over your accounts goes hand-in-hand with planning, and a great deal of that confidence comes from having some cash put aside for the future.
- If you're not the planning type, you can instruct your bank account to automatically do this, so you don’t need to think about it.
- Even 500 or 1000 Rupees monthly is a good start.
Look For Government Help Programs
- Governments over the world have declared different initiatives and upgrade packages to help those affected by the COVID-19 pandemic.
- Thus, check on the off chance that you are qualified to profit from these help programs and benefits.
- These are explicitly for those individuals who are confronting cutbacks or are deeply impacted by the pandemic.
Don'ts Of Managing Finances
To manage your finances for a secure future, ensure you Don't do the following things.
Sell your stocks In Panic
- It is stressful to sit quietly and not react to the securities market crashes, which are enticing you to sell your stocks.
- Nonetheless, history reveals to us that markets have consistently bounced back over the long haul.
- On the off chance that you commit the financial mistake of selling your stocks now, you will lose the opportunity to recover your losses when the market recuperates.
- Panic selling of your stocks may prompt capital misfortune and fail in meeting your monetary objectives.
Retain Instalments Without Insinuating Banks Or Lenders
- If you aren’t able to repay your basic instalments, you need to contact your banks or lenders and request help.
- The loan specialists may offer you a respite, allowing you to defer your instalments for a couple of months or until things get better.
- On the off chance that you quit making instalments without informing the lenders, you will be viewed as a defaulter, and that would adversely impact your credit report.
- A drop in your financial assessment will make it harder for you to borrow in the future.
Shopping From Stress or Boredom
- Online shopping has exploded, and it's easy to see why.
- For those of us who were (or still are) spending the greater part of our time at home, it's the best way to get goods, cleaning supplies, and different necessities.
- Since we're exhausted and pushed to differing degrees, shopping online is a simple, handy solution to feeling better for a short period.
- Yet, spending on things you don't need can rapidly escalate into a monetary crisis.
Taking New Debt
- In case you're facing a financial crisis, getting pre-approved credit offers can appear to be a lifesaver.
- However, if possible, avoid getting into new debt at this moment.
- You could run up thousands in charges, that could take you years to pay off.
- Regardless of whether you're financially steady or not, try to avoid taking any new debt.
- It might appear to be a too-good-to-be-true offer; however, the economy is as yet in transition, and it's best to wait until things settle.
Not meeting Your Financial Adviser
- It is an ideal opportunity to have your monetary planning done by your financial counselor and adhering to the plan.
- Any hasty calls without such consultation could again be hazardous to the financial health of your portfolio.
- Nothing is permanent. Not even this pandemic.
- If you look at the bright side, you will feel that this unanticipated pandemic has not just offered you an opportunity to spend some quality time with family but has also given you plenty of time to manage your funds every day.
- 'Dealing with your personal finances' will unquestionably help you tide over these difficult times.
- Follow the ‘do’s’ and ensure you avoid the ‘don'ts’ mentioned above, and you will be able to get through this pandemic with no enduring harm to your finances.
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Q- What should be an ideal amount as an emergency fund?
- It depends on your lifestyle — there is no rigid number that applies to everybody.
- Your best bet is to have three years to six months of your total everyday costs (lease, food, transportation, monthly bills) tucked away for crises.
- That way, if you unexpectedly lose your employment or fall into tough situations, you can keep up your way of life without piling up major unpaid liability.
Q- What is a Budget? Do I need one?
- A financial plan is a fundamental comprehension of how much cash you're spending versus how much cash you're making.
- For example, simply automating a specific amount of your income into your saving account is technically a budget.
Q- What's a Credit Score?
- A credit score is numeric rating creditors use to assess borrowers' risk.
- This rating is characterised by how much obligation you have, regardless of whether you pay your bills on schedule, the number of credit cards you have, and any unpaid bills, among different variables.
- Lenders use this score before making lending decisions.
Q- Would it be advisable for me to continue saving if my pay has changed?
- Continue saving.
- On the off chance that you lose your employment or can't work, you will still have the 6-9 month crisis saving account to assist you with continuing to bear the cost of your necessities.
- An emergency fund is a sort of investment account that can assist you with covering enormous, unexpected costs.
Q- Would it be advisable for me to prioritise paying down debt or my emergency fund?
- Typically, debt should be a high priority.
- However at this moment, with countless loan specialists giving help, if you lack savings, a better move is to call every moneylender and get extensions on instalment payments.
- And terms to give you some squirm room in your budget, and permit you to the bank that monthly debt payment into a savings account."
Q- How should the budget be adjusted if income is disrupted?
- If you have fallen behind on payments, you'll need to change your spending plan, consider unemployment benefits, fractional compensation, a blend, or whatever else you're working with regarding pay.
- Also, as far as costs, dispose of all that doesn't qualify as an absolute need, for example, new clothes and unnecessary monthly subscriptions.