6 Ways to Plan Your Finances During the COVID-19 Outbreak
The COVID-19 outbreak that began from the wet markets of the city of Wuhan located in the Hubei province of China continues to wreak havoc across various industries and sectors worldwide. Many countries have declared states of lockdown to prevent the spread of the deadly pathogen. The financial year 2020-21 began in the midst of lockdown and economic crisis.
The stock market one of the worst phases after the 1987 market crash. Investment in equities has been eroded by a minimum of 25 to 30%. Moreover, the interest rates available in the market are extremely low that has created a serious issue for investors. Fixed deposits, mutual funds, and saving bank accounts are unlikely to yield massive returns.
Now the question arises how can we plan our finances in the phase of this financial turmoil? Which market-based securities are most suitable plans for investing and yielding high rates of returns? To answer all your questions and clear all your doubts we’ve come up with 7 ways via which you can plan your finances efficiently during the COVID-19 outbreak. Furthermore, we will be sharing some important tips and tricks that will help investors to build a corpus during this phase of financial instability.
The first tip that comes into picture while planning finances during the novel coronavirus outbreak are building an emergency fund to protect you on the trail of life against the strokes of uncertainties. As the market situations might worsen there is a likelihood that people will lose their jobs therefore it is vital to create an emergency fund that will help you during phases of financial turmoil.
In case you or any of the family member falls sick or losses their job this emergency fund will help you to make ends meet. Typically, the minimum amount that one should have in their fund should be equivalent to the salary of six to eight months. If you don’t have an emergency fund in place it is time to act wisely and build a fund that will safeguard against unexpected situations.
Accrue Highly Liquid Commodities
An important point to be kept in consideration while planning your finances during the COVID-19 outbreak is accruing commodities and entities that have high liquid value. Liquidity refers to the ease with which a commodity can be exchanged against cash. Gold is a highly liquid commodity and therefore has inflation-beating capabilities.
One should try and accrue commodities that are liquid along with cash reserves as they help an individual to combat phases of uncertainties. For example, if any of your members falls ill on a weekend having cash in hand will turn out to be extremely useful.
Prepare List of Assets that can be Liquified
During the pandemic, it is vital to be aware of all the commodities that can be liquified, even if they are sold at a lesser price than what their value is. Preparing a list will provide you a rough idea about those assets that are liquefiable during phases of financial instability. These assets would include additional property, equity funds, gold as an investment. Try and avoid opting for any sort of credit as there is a likelihood of losing a job due to an economic crisis.
Cut Down on Your Expenses
In order to cut down on unnecessary expenses, it is important to prepare a list of all expenses that are not urgent or can be delayed. Rank the expenses in the order of their priority and try to cut down on expenses that have low ranking as it will help you to save money during this phase of the pandemic.
Reevaluate Your Financial Goals
One of the most important tasks to be performed during the pandemic is the reevaluation of goals. One can begin with checking their investments that have been planned from the last year. The ideal target should be saving a minimum of 30% salary and saving it. Correction in the market would typically mean that you would have fallen behind on long- and short-term financial goals. However one should understand that this phase of the pandemic is not just a phase of turmoil but a phase of opportunities. One can save more and invest more at an accelerated pace which will help them to achieve their goals quickly.
Buy Life Cover
Buying a life insurance Cover during this phase of instability and turmoil is an absolute must as it helps to provide financial protection for you and your loved ones. Term insurance plans are quite affordable and flexible and the best part about these plans is that they provide a good cover amount in case of any event that leads to the demise or disability of the policyholder. Try and purchase the maximum coverage that you can afford as it is the only way to mitigate the various risks and safeguard your loved ones on the trail of life.
In a Nutshell
The entire world is battling a serious health issue and therefore to make sure that you are safe it is important to practice social distancing and staying home. With the above-mentioned ways, it will become easier for the investor to plan their finances during the COVID-19 outbreak.