Money Management Lessons During Coronavirus Outbreak
Money Management Lessons During Coronavirus - The coronavirus outbreak is having a serious impact on India’s economy and hence, on its citizens.
While many may already be under a financial crunch, others might be staring at situations like reduced income or job losses
But as Albert Einstein once rightly said, “In the middle of difficulty, lies an opportunity.”
So, while no one knows when the coronavirus is going to end, let us use this free time we have got during the coronavirus lockdown to learn some money lessons.
Here are a few financial takeaways from the pandemic that we must follow to have a stronger hold on our finances in the future
Read them carefully!
1. An Emergency Fund Is A Must
An emergency fund is a fund that you use only in case of a dire need or in case of an unexpected and unavoidable event like the current coronavirus outbreak. Having an emergency fund is the first step towards financial planning. This is because saving starts even before you actually start investing. The thumb rule says that you must have emergency funds to survive for at least 3-8 months without income. This amount should include the sum for your EMI and loans if any. Save this amount in a separate savings account and/or a Liquid Fund.
Some unpredictable events where the emergency fund may help include health emergencies, job loss, or if your health insurance company refuses to pay for your health insurance claim.
In short, it is always wise to have an emergency fund so that you do not land in a situation where borrowing money is the last resort.
2. Timely Buy Health Insurance
When it comes to buying health insurance in India, many choose to procrastinate the task. And the pandemic declared coronavirus is a wake-up call for all such people. Not only during COVID-19 but having a comprehensive health insurance plan for yourself and your family is beneficial. It can save you from financial ruin in other uncertain life events as well.
Make sure you get a health insurance policy with adequate cover (of at least Rs. 5 Lakh sum insured). You should opt for a sum insured keeping in mind the rising healthcare cost which includes pre, post and inpatient hospitalisation. So, even if you are already covered under a health insurance plan provided by your employer, check on the benefits and buy a new one if your current health insurance plan is not enough for you and your family.
3. Spend Your Hard-earned Money Wisely
You may not face any difficulty in paying bills when your salary flows smoothly every month. But during unforeseen circumstances like the current coronavirus times, making it till the end of the month may become hard for many.
Therefore, a budgeting exercise is recommended so that you spend only on avoidable expenses and save the rest. Judicially spend your hard-earned money so that you have savings when required.
4. Never Rely On One Source Of Income
Another most popular piece of financial advice is to have a second source of income or diversified sources of income.
Coronavirus has taught us that relying on one source of income only increases the stress level. As the economy slows, everyone is stressed about how they will make the ends meet, except the ones with more than one source of income.
Taking up additional work after long office hours can be hard to manage. Thus, you can take assignments or small projects that you can complete over the weekend and earn some extra money.
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Manage Your Investments; Exit Loss Making Ones
Investing is a wise decision but not always. You must know when it is better to exit than staying invested in a loss-making investment. Thus, it is important to manage your investments wisely and take actions when required.
Management of investments also include diversification of investments. Try to invest in different assets and not “put all your eggs in one basket”. This helps you in hedging when one asset is adversely affected by negative trends.
Takeaway!
Follow the above-mentioned money management tips in order to maintain your financial stability during the unprecedented times of coronavirus lockdown.
Keep yourself healthy as well as motivated, after all “Tough times don’t last, but tough people do!”
So, do your best to manage finances for a better future and stay on the right path.
