The Covid-19 pandemic has not only affected the millions of lives but also the world’s economies have been disrupted. Many economies of the world have gone to recession as lockdown has been imposed by the countries to stop the spreading of Covid-19.
Due to this reason, the unemployment rate has been increased and people are getting pay cut. Because of this prevailing situation, it is extremely important for us to manage our finances effectively. At this time, one should not only take precautions for his health but also his wealth.
Here are some financial management tips that will help you effectively maintain your finances during this Covid-19 pandemic:
At this time all of us need to have an emergency fund. Whether you are employed or not, you should create an emergency fund that will help you in an emergency. Because of this economic situation if you are the single earning person in your family and a situation comes of a medical emergency, then from where you will arrange the finances?
This emergency fund will help you when you or your family have medical emergencies. An emergency fund should comprise of at least 3-6 months’ worth of expenses in form of highly liquid assets.
Cash is the most preferable when it comes to highly liquid assets. You can keep this emergency fund at home or also open a separate savings account where you can also get interest on this fund.
Everyone should have health as well as life insurance when the world is going through such a pandemic.
You should also remember to pay the premiums on time if you own term insurance or the policy will be stopped.
If you are the only earning person in your family, then you need to have life insurance.
In the case of your death, the money from life insurance will help your family members during the financial situations.
So that in case you or your family member test COVID positive, the health insurance will help you in covering the hospitalization charges.
Making a strict budget:
During this time of crisis, it is very important to make a budget. After setting aside an amount for an emergency fund, one should make a budget that should cover up all the expenses. These expenses should include necessities expenses such as paying for the rents, premiums of term insurance, buying vegetables, and so on.
When making a budget you should cut down unnecessary expenses that we will be discussing in the next point.
After making the budget, it is also important to stick to that budget and should monitor it on the daily basis.
Once can make changes to the budget if some emergency comes in the future.
Avoid unnecessary expenses:
Try to avoid unnecessary expenses.
Because of lockdown, many expenses have already come down, like the transportation expenses to work, going to the mall and making unnecessarily shopping expenses, expenses of watching movies in the theatres, and so on.
When staying home during the lockdown, one should avoid doing unnecessary expenses like doing online shopping.
It is the best time to stop doing the unnecessarily expanse and saving those funds for emergency situations.
Continue with your investments :
One shouldn’t stop their investments in the stock market. If you follow the stock market, then you might notice that the stocks like Reliance had gone up and crossed 52 weeks high. Almost all the pharma companies are at their 52 weeks high as they are in the different phases of developing vaccines.
So one should not take out their investment from these stocks or even from their fixed deposits.
When the economies come out from their recession phase, the interest rate on your investment may get better and you will benefit from it by getting higher returns.
If you have sufficient funds for your emergency fund and also to meet your daily expenses, then you should continue doing investments in the financial assets.
At this time of the pandemic, it is always better to remain calm and not to have panic attacks. If you are following all the above tips then you will be able to manage your financials efficiently during this pandemic. Always remember to not to take out your funds if there is no such emergency. Keep saving and investing in the financial assets in which you can get good returns during such times of crisis.
This shall to will pass!
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