Money

Covid-19: How to deal with your personal finance concerns in such uncertain occasions?

To deal with their funds throughout such uncertain occasions, one ought to comply with probably the most basic items of economic planning.

The lockdowns imposed to include the surge of Covid-19 an infection have prompted widespread financial disruptions due to closure or suspension of business actions in many organisations – from small and medium enterprises (MSMEs) to larger firms. As a end result, many individuals are dealing with monetary hardship after job loss or wage lower – in some circumstances stoppage of whole wage funds.

To deal with their funds throughout such uncertain occasions, one ought to comply with probably the most basic items of economic planning.

Emergency Fund

The first step to deal with such a scenario is constructing an emergency fund. One ought to preserve adequate quantities wanted for at the very least six months in liquid type – money, financial savings financial institution deposit, breakable fastened deposit (FD), liquid/short-term fund and so forth – in order that the particular person could sail by a disaster interval with out a lot hardship.

“As the nation grapples with the second wave of Covid-19, many people are left worried about their personal finances once again. In order to be prepared for such unprecedented circumstances, it is important to maintain an emergency fund that can cover at least three to six months of basic necessities such as food, rent, and monthly utility bills,” mentioned Raghuvir Gakhar, CEO, PC Financial.

Insurance Cover

Insurance is an important instrument that gives monetary cover in opposition to unexpected eventualities. Individuals ought to take life insurance coverage to guarantee safety of their financially dependent members of the family, in addition to medical health insurance to defend their financial savings in case of big monetary burden throughout hospitalisation.

“The current health crisis has also highlighted the need for quality health and life insurance that offers broad coverage,” mentioned Gakhar.

Credit Score

In case of absence of satisfactory emergency fund and/or insurance coverage cover, an individual might have to take some mortgage. To get a mortgage at a decrease curiosity rate, one ought to keep a wholesome credit score rating. For this, well timed compensation of current loans and bank card dues and so forth should be carried out. Apart from mortgage, one may additionally go for a credit score line to guarantee fast availability of money on credit score up to the set restrict.

Facing fund crunch after job loss? Here is how to unlock your dormant financial institution account

“In order to have some cash liquidity, it is also advisable to maintain a good credit score because, in case of the need for cash, it will help you access pre-approved loans,” mentioned Gakhar.

Long-Term Loans

The present low curiosity regime could immediate you to purchase long-term belongings like automobiles, AC and so forth on credit score, in addition to immovable belongings like property. However, taking a long-term mortgage creates an obligation of spending future earnings to repay the mortgage. In case of lack of earnings due to some emergencies like Covid pandemic, it aggravates the monetary hardship. So, it’s higher to keep away from pointless purchases on credit score to scale back future monetary burdens.

“Another concern is the purchase of immovable assets due to low-interest rates. The decision should be taken after considering both the short-term and long-term impacts of the pandemic. Last but not least, it is vital to maintain a healthy debt to income ratio and not splurge on future earning potential,” mentioned Gakhar.

Get reside Stock Prices from BSE, NSE, US Market and newest NAV, portfolio of Mutual Funds, Check out newest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and comply with us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and keep up to date with the newest Biz information and updates.

Back to top button