Dos and Don’ts to Manage Personal Finances During the Pandemic
All thanks to COVID-19, the world economy is in a state of chaos, which has left many people feeling insecure about both their jobs as well as their finances. During such unstable times, with the financial stress rising by the day at an alarming level, it is very tough to make choices that are rational when it comes to managing your personal finances in the best manner. However, if you wish for your financial future to be secure, it is crucial for you to avoid any money-related mistakes and making financial decisions that are wise and smart.
You must have wondered how one can overcome the financial crisis on a personal level, well, further in the thread we have jotted down a few dos and don’ts related to managing your finances during these difficult times amidst a pandemic.
Do: Build Your Emergency Fund
There could be a time during this pandemic when you might face an actual emergency, it could be a job loss or maybe a pay cut, leaving you with no or very less income to pay your outstanding bills. So, this is the right time you get aggressive about adding to your emergency fund. The experts in the industry recommend one to have about 3 to 6 months’ living expenses in an emergency fund.
One way to add to your emergency fund quickly is to repurpose any foregone spending. If your job is requiring you to work from home, the money that you spent on your meals, commute, etc. could be redirected towards the emergency fund you are building. And due to the quarantine of the air, everyone is refraining from any leisure activities, such as movies, dinners, concerts, etc. so the funds that before went for such activities can now be put into your emergency fund.
Do: Seek Help from Your Bank
The government authorities have taken out special measures wherein banks can help you with easing your Loan EMI payments. For instance, if you have taken up a personal loan with a low salary, you can ask the bank about the measures they offer to ease out your Personal Loan EMI payments. However, if it is possible for you to pay off just like normal, it is a better option to do so.
Do: Control Your Spending Behaviour
If you are not feeling very secured about your personal finances during these unstable times, it is important to take a closer look at your expenses. Try and spend only on the essential things and try your best to cut down to the bare minimum on the expenses that are not essential.
It is very important to keep your monthly bills as your priority. Anything apart from these can wait. Make sure to prioritize your monthly essential bills such as rent, electricity, EMIs, premiums on insurance, among other things.
Try to purchase your essential items in bulk. Try to find out and buy the maximum number of items at the lowest possible price.
Do: Take a Loan to Avoid Difficulties
If you are currently facing some income disruptions due to a salary cut, you can consider availing personal loan at a low-interest rate for the short term to cover your emergency bills. Although funding via a loan is an easy option, it should definitely be your last. It is not a good idea to take on debt if you are unsure about the repayment of the same.
Do: Cancel Subscriptions to Non-Essential Services
With being locked down at home for your safety, subscriptions to streaming platforms might seem like something that is much-needed. However, these are luxuries that you might not be able to afford if you are not secured financially. It is a better alternative to simply stick to free streaming platforms, read books that you have at home, or just simply watch the channels on TV that you have subscribed to for your entertainment. These steps seem very small but can go a long way in helping you save on funds during these unstable times.
Do: Stick to Your Current Job
If you are still having a job during this pandemic, make sure you do not take it for granted. The Coronavirus outbreak has brought along numerous layoffs and companies have stopped hiring in order to cut down on their costs.
If you are not very happy with your present job, do not switch. Hold on for a few months before you consider switching.
Do: Try and Earn Extra Funds
Think of ideas that can help you earn extra cash. Consider selling the things that you do not use any longer, take up a side job, take up some freelancing projects, anything that can help you get your hands on some funds. The money earned from these activities might not be a very large amount, but the small amounts earned can add to a large amount over a long period of time.
Do: Check the Coverage from Your Insurance
An insurance policy can help you a lot in terms of any sort of crisis. It is important to ensure that you have sufficient insurance coverage, and not just the minimum required to cover. This is applicable in all sorts of insurance policies, be it health insurance, life insurance, or auto insurance.
Do: Make a Plan That Gets You Future-Ready
The COVID-19 Pandemic has brought light to the fragile state of the world economy and also the healthcare systems worldwide. Make sure you jot down all the troubles that you might be going through as of now. Think of questions like is your emergency fund sufficient? Do you have a sufficient amount of insurance coverage? Are you deep in debt? Do you have a stable job? And then move on to making a thoroughly detailed plan to overcome and cover the struggles involved.
Don’t: Panic and Sell Off Your Shares
The recent stock market crashes make it difficult not to panic and sell off your shares. However, one thing the stock market history has taught us is that markets always manage to recover over the course of time. If you make a mistake and sell off your shares now, you might not be a part of the market recovery that happens in the future. You might end up with capital losses as well as financial goals that are unfulfilled if you panic sell your shares.
Don’t: Buy Stocks in Excess
Many of the investors tend to buy a lot when the stock market crashes. It is a good move only if it is done in a measured manner. Don’t make the financial mistake of investing too much just because you do not want to miss out. Figure out your appetite for risk after measuring your financial scenario. Ensure you have enough in your emergency fund before you invest a lot.
Follow these dos and don’ts so that you can come out of this pandemic with financial health that does not have any long-lasting damage.