What are the important financial lessons for life after Covid-19 pandemic?
Covid-19 has adversely affected the economy of almost all the countries across the world, and thus it has been a wake-up call for everyone. Whether you are self-employed, or just starting your career or newly married or new parents, the pandemic has severely impacted every single individual in one way or the other.
However, it has reminded everyone to be always prepared for the worst scenario because no one knows what the future holds for them. And during uncertain situations like the present time, being financially assured about the future by carefully planning them is the wisest thing to do. So, here we have listed some of the important financial lessons that everybody should take from the ongoing pandemic crisis.
Always keep aside an emergency fund for challenging times
This is something that our elders always talk about. And why not as this is one of the most important financial lessons to tackle crisis during uncertain times. For instance, if someone has just joined a company where job security is low, then keeping aside funds can not only help him or her on rainy days but can also help in achieving long term goals. Then in case of those who run their own business, setting up an emergency fund is always useful as the risk factor is more with them. Taking a cue from the current scenario, it is always recommended for a self-employed professional to keep a sufficient emergency fund in place so that they can handle any sudden financial obstacle.
Do budgeting and keep unnecessary expenses at bay
Regular budgeting is a healthy habit to maintain a robust financial condition. It gives you insights about your expenses, fixed payments and more. With the help of budgeting, you can also plan your long-term goals by assessing whether to take a loan when required or you need to reduce your expenses and save on paying interests. A well-planned budget can make you sail smoothly through uncertain times like the present pandemic situation wherein scenarios like salary-cut and, job loss are becoming common.
Make a long-term objective
Covid-19 has reminded us once again that nothing is certain – financial disturbances are part of our lives. Hence, you need to develop a long-term plan for financial stability. Creating a financial plan is a gradual process wherein you learn how to manage your finances while building wealth. Therefore, you need to patient and prepared for consistent and long-term learning. Review your budget regularly and make changes or adjustments if necessary.
Buying life insurance has become a necessity
Disasters do not strike based on your age, status, and socio-economic background. Unfortunate events can happen anytime with anyone. No one would have thought in their wildest dream that some unprecedented time like Covid-19 would come. And thus, now people are more concerned about securing their families against such situations and looking at life insurance as a necessity rather than just considering it as a tool for tax saving. Individuals have now realised the importance of having life insurance as a plan-b for safeguarding their loved ones financially in their absence.
Limit your credit in your financial portfolio
Nowadays, everything is available on loans, and it is very easy as well to get a loan. Several individuals spend half of their salary or even more towards paying EMIs. In the case of the current scenario where people are facing job loss and significant salary cuts, it becomes tough to pay the EMIs on time. Although RBI has given some relief as a moratorium for loans, that is a temporary relief and not a long-term solution. Therefore, the present situation teaches us not to opt for unnecessary loans. Financial experts also suggest that your EMIs should not exceed 20 to 30 percent of your total monthly income. Therefore, it does not matter whether it’s a long-term loan or a short-term loan; the majority of your salary should not go into EMI repayment.
Diversify your investment portfolio to reduce risk
One of the ideal ways to reduce risks associated with your investments is by diversifying your portfolio. It would be best if you began with your financial planning by investing in a variety of market-linked assets and non-market linked savings tools. You can start by putting your funds into different places and allow it to grow gradually with time.
Covid-19 has indeed marked some important financial lessons related to being financially prepared for future uncertainties. The sooner one can start with the financial planning; the better could be the future. It would help if you had a robust financial plan comprising investment and insurance products. You can visit BimaKaro.in to gather details on the important financial lesson or speak to the experts for more insights.