Accepting and digesting the financial changes during Covid times and preparing for alterations in future is the new norm applicable to each one of us. With the inflow getting affected due to lesser income resulting from pay cuts or job loss is understandable. At the same time the usual spending and investment schedule too need changes. The emergency funds are getting more attention and hence regular or monthly investment plans do not get more allocations.
It is important to not only sail through these difficult times but also to be positive about our family’s future. We need to look forward, get focused despite many difficulties, and manage money matters mindfully for the coming years.
How to balance between the present and the future?
1.Financial planning and management
- Keep your spending habits under check. Do not overspend or over anticipate future flow of income. Unnecessary goods and articles should not be assigned priority now. Spend only for basic necessities and avoid getting tempted to get things which can be bought later.
- Maintaining sufficient cash flow is need of the hour. Short-term financial needs can be taken care of by keeping the required sum of money on hand.
- Do not indulge in unnecessary borrowing. That will only add to your stress. And if it is really needed, go through proper channels and get a short-term loan from recognized sources only. This should be done only if meeting your routine expenses have put you to a standstill. Continue paying off the ongoing obligations and avoid getting fresh loans.
- Once you manage to pay off your regular bills, divert money the remaining funds according to your previous plans of investment. Be it equity, mutual funds or any other kind of investment options that you prefer, allocate the residual funds by investing in them. The long-term fixed investment plans like PPF should be given a priority as they are directly related to your retirement plans. Depending upon your age, distribute the available funds amongst equity, mutual funds, bonds, fixed deposits etc. as per your preferred risk-return appetite.
2.On the personal front
Get a health insurance cover-One of the main security basics is getting a health insurance cover. You may or may not be covered under group insurance by your employer. It is always advisable to get an insurance of our own for the sake of being the primary bread earner of the family and also when sharing earning responsibilities with your spouse.
Keep an emergency fund ready-In the middle of job losses and salary cuts, it’s paramount to have an emergency fund to meet at least six months to a year’s expenses. Due to contingencies involved regarding health of the family members or other uncertainties that might arise in the short term, keep aside an amount to take care of any sort of emergencies. Ideally the money should be kept either in a savings account or other liquid funds.
Stick to your current job/business and wait until the challenging period is over– Try to continue your current financial activity, be it a job or business. If the job or business does not let you earn enough money, there are equal chances of not succeeding while trying out other avenues, as the time not right. Do not jump to unknown ventures and wait until the situation stabilizes.
Bhoi Smrutirekha Dharanidhar