Tips To Smartly Manage Your Money During Coronavirus Outbreak
Besides money matters, you must take care of yourself and encourage others to do the same.
Photo Credit :
The coronavirus pandemic has resulted in worldwide chaos. The stocks have suffered the fastest collapse. The nations are busy isolating themselves. The headlines are reflecting panic. These are unusual times. It is not only important to remain calm, but also take care of personal finances. During such times, fear is often exaggerated.
While governments are handling the situation on a war footing, you too must be prepared in your own way. In extraordinary times there are several ways your finances can be hit. You must double your emergency fund. Many people underestimate the need for an emergency fund. During pandemics, the chances of loss of income or emergency hospitalization increase significantly. In such a scenario, the emergency fund can provide adequate back-up.
Instead of visiting the bank to service your home loan or car loan EMI, you should transact digitally. It is advisable to avoid social contact in all forms. If the outbreak worsens, the bank branch might remain closed. Non-timely payment can result in late fees or other charges or even default. Instruct your bank to auto-debit the EMI payments to avoid hassles.
The financial markets have collapsed. Before divesting your portfolio in panic, remember that the present crisis is not the result of some asset bubble. The pandemic has disrupted the global trade, but its impact will be short-term. The businesses are not shutting down. Indian economy is still expected to grow at the rate of 5% annually. In fact, with valuations coming down, the stocks have become even more attractive. Take advantage of rupee cost averaging to beat the volatility. The markets have always bounced back. In 2008, due to the housing bubble, the indices shaved off more than 60% in a year but recovered losses within 2 years. In 2009, the Swine Flu pandemic took over the world. The Swine Flu pandemic killed 18,000 people worldwide. When the Swine Flu outbreak broke out, NIFTY was trading at 2719 level. One year later, NIFTY traded at 5262 levels. A gain of 90%! Just like companies stick to their business models, you must stick to your financial goals.
You must review your health insurance. Check with your insurer to find out whether you must buy extra riders. Reviewing health insurance periodically can help you to avoid unpleasant surprises later. If you feel to ramp up your health insurance, do so at the earliest. Ensure that all your family members including your parents are covered adequately. Purchasing separate health insurance for your parents can help you claim rebate up to Rs 25000.
Avoid impulsive spending. The money saved is money earned. Review your expenses and cut-down on non-essential expenses. The money saved can be used to boost your emergency fund. The priority must be reshuffled so outflow of money can be controlled. Remember, conventional risk-management might prove to be inadequate. You will have to devise novel ideas to avoid unnecessary spending.
Finally, be an active participant in your community. If you are capable, try to help those in need. Instead of scouting for discounts everywhere, support the local businesses. Donate money to food banks or other community cause in your area. This is the best time to make people feel loved.
Besides money matters, you must take care of yourself and encourage others to do the same. Wash your hands regularly and avoid direct contact with people. It is also important to keep yourself informed about the developments across the globe. This will help you to remain calm and think rationally.
Coronavirus - Dos and Don’t
DO wash your hands for at least 20 seconds, several times a day.
DO practice “social distancing”: Avoid large gatherings and crowds in poorly-ventilated spaces
DO prioritize your health. Ramp up your health insurance if need be.
DO wear a mask properly around others if you suspect you may have the virus
DON’T touch your eyes, nose, and mouth.
DON’T travel if you have a fever.
DON’T panic. Taking proper precautions and making preparations are the best things you can do.
DON’T go out except to see your doctor, after calling first.
DON’T use public transportation, taxis, and ride-sharing.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.