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However, it does not end there. It is extremely important to make the required preparations and adjustments when it comes to dealing with personal finance. This will ensure that we are on a stronger footing to take up any difficult situation that might come our way.
Here are some key tips in regard to the same that might help you in coming out of this Pandemic with stable personal finances!
The global economy has already been impacted by the sudden outbreak of Covid-19 and it is possible that there might be long-term repercussions of this recent volatility. In such a case, it is most sensible to increase your emergency fund.
In an ideal scenario, one’s emergency fund should be about a minimum of 6 months’ expenses. But in such times, it makes sense to increase it a bit to meet the responsibilities and requirements. Your emergency funds are what will be your rescuer if you are likely to face any financial losses in the near future caused by this pandemic.
There is also some confusion regarding the coverage for pandemic treatment under the health insurance policies that people are holding. Therefore, in the scenario of your insurance provider refusing to cover any treatment related to coronavirus (which has now been declared a pandemic), your emergency funds can help you out of this difficult situation.
Additionally, having a sufficient amount of contingency funds will reduce the chances of you depending on borrowed funds during any difficult situation.
If you are servicing any type of loans such as a home loan, car loan, or a personal loan, and you have opted to pay your monthly installments i.e., EMIs via an offline method, it is a good idea to change to an online method at the earliest. This is because if it comes down to the situations of banks getting shut due to the outbreak, you are likely to be left with late payment fees or default of your loan.
For any credit cards you might be owning, it is best to have a good grip over the online banking platform offered by your bank. Payment via credit cards is an easy way to fund your emergency purchases in this otherwise difficult situation. For the payment of the outstanding dues on your credit cards, you can easily make use of the platforms offered via the bank such as online banking and auto-debit facilities without having to step out of your home.
There is already a volatile phase that the market is experiencing amid this outbreak, which may lead most of us to get second thoughts and doubts about our long-term investments in different avenues such as mutual funds SIPs, etc. However, you may want to stick to your long-term investment in mutual funds SIPs in order to save towards your future financial goals. SIPs are aimed at benefiting the investor by making use of the rupee cost averaging in order to absorb any shocks of the market and help in fetching the desired returns. The longer you stay invested, the higher are the chances of you getting your desired returns.
Until the World Health Organization (WHO) did not declare coronavirus as a pandemic, the treatment costs involved were covered under most of the health insurance policies in the market. But ever since it has been declared as a pandemic, any policies that do not include the pandemic treatment may refuse to settle any claims that arise from this cause. This is why it is extremely important to go through your policy contract and be aware well in advance what all your health policy covers and excludes. Additionally, have a talk with your insurance provider to get any latest relevant information.
Under such a situation, it is best for you to limit your expenses that are not essential. Adequate savings are what will come to use if things were to get worse in the near future. You should also control any deep pocket expenses made by your discretionary funds in such a situation as it will help you boost your emergency fund. You should review your budget and as per that prepare a list of essential shopping requirements by prioritizing them.
This is also a good time to dig deep into your investment portfolio and review your investments and depending on that make practical decisions. If your portfolio is more inclined towards either equity or debt, you might want to rebalance it in a different manner. You can also opt for increasing your investments in gold as it has proved to provide a hedge against market volatility. If you are an investor who is risk-averse, you can consider investing in investments that are relatively risk-free.
However, whatever decision you reach after the review of your portfolio, always remember, your decisions should be based on your financial goals, liquidity needs, and risk appetite. If you are confused or in doubt regarding any decision, it is best to get professional advice from a financial advisor and avoid paying any attention to any rumors you may hear.
To further conclude, in a situation of crisis such as this, it is important for everyone to be calm and composed. This is why it is important to avoid panic and make sure that you are your loved ones follow all the instructions laid out by the authorities to ensure safety and avoid the further spread of Covid-19, especially when it comes to social distancing and maintaining hygiene. Similarly, calm your nerves and make the required preparations to have stable personal financing during these unstable times.
Last but not the least, remember to wash your hands regularly, and carry a sanitizer and mask with you at all times!