The world is in a lockdown because lives are at risk due to the novel coronavirus. And this has led to economic distress caused by business losses, job depletion, layoffs and pay-cuts on one hand and rising expenses and inflation on the other.
As the economic stress deepens, people are risking their lives to get back to work as money is crucial for survival. These are tough times but one can see through them with careful assessment of their current financial situation and thoughtful planning to secure financial stability
Here are a few pointers to help you take control of your finances during the pandemic:
- Assessment of your current financial situation: Take an account of all available sources of income – salaries, returns from investment/savings etc. Next list assets and investments – ones that can be quickly liquidated, others that can be liquidated within a period of 1 – 3 months if the need arises, and ones that are more difficult to liquidate like property, bonds and funds with a lock-in period etc
- Make a list of expenses: Start with regular monthly expenses that are mandatory like rent, maintenance, food, utilities, medicines, school fees and the like. Next should be a list of loan repayments including credit card bills, insurance premiums, regular investment commitments like SIPs in mutual funds etc.
- Map income to expenses: If the total monthly income does not add up to the expenses, then start by ticking off expenses that can either be reduced or done away with for the time-being. Unnecessary lifestyle related expenses should be completely shut-down for the time being. Spend only where necessary and avoid all frivolous spends. Some loan payments can be deferred by talking to creditors. The Government has defined rules and measures to stop evictions and foreclosures and allow for reduced or deferred payments to landlords, creditors and even schools. Learn about Government aids, policies and measures and consider what can be of help to you
- Keep an emergency fund ready: It is important to keep an emergency fund ready in case we do fall prey to Covid. Also other medical urgencies or exigencies might call for funds which can be difficult to source at the time of need. Ensure that you have 5 – 10 lakhs, if not more, in your savings account that can be availed immediately. Liquidate your savings/ investments/assets or else in a worst case scenario, take a loan from relatives/ friends to keep such an amount ready and consider this fund sacrosanct.
Use this time to make a financial plan for life after the pandemic. A plan to recover financially and get on the road to prosperity. A plan that would always keep you in good stead in the face of life’s challenges. Also take measures to redefine your lifestyle towards enhancing your physical, mental and emotional well-being. Remember, Health and Wealth complement each other and allow us to live #FutureFearless.
