6 Ways to ensure Financial Wellness during Covid

Table of Contents

1. Adopting financial discipline

The stock market, bond market and other financial markets have come down heavy under the hammer of coronavirus. Companies have begun the painful process of layoffs and pay cuts. Demand has been hit, due to consumer sentiment being hit. Global supply chains have seen major disruptions. In short, the whole world is experiencing uncertainty and extreme distress due to the unprecedented COVID-19 pandemic.

The outbreak of covid-19 only made matters worse for the global economy, which was already juggling between many issues. On a personal level, your live and livelihood would have also taken a difficult turn, since pretty much no one has been spared. You must take prudent financial actions, both preventive and corrective, to ensure overall your and your family’s financial wellness.

2. When reality changes, tweak investments accordingly

If you still have not made peace with the fact that each day we’re inching closer to a recession, high time you do. This implies a future liquidity crunch coupled with high inflationary pressures. Investors are almost always advised to take a long-term view but in this situation, it is equally important to set up short-term financial goals. Investment decisions during this period should be made keeping in mind your short-term goals. The investments should be adequately liquid to address contingencies and short-term needs.

​3. Study your financial records closely

Here are some tasks you need to prioritize and work towards-

  • Create a will to ascertain rightful owners of your assets
  • Prepare a balance sheet with your assets/liabilities, share it with someone you trust
  • Appoint nominees for all your investments/bank deposits
  • Keep your life and medical insurance policies handy and readily available. Share the details with immediate family members
  • Take stock of all your loans, existing EMIs and create a backup plan to service the debt

Your financial plan should incorporate these above-mentioned tasks. Ensure that your financial documents are appropriately managed and documented. Moreover, your financial assets should come to your rescue, should the need for immediate funds arise.

​4. Exercise financial prudence and caution

The uncertainty around the pandemic calls for monetary tightening. Cut down unnecessary expenditures and excessive use of credit cards, these would only increase your liabilities. Figure out what is the bare minimum spending that is essential. Ensure timely payment of EMIs for existing loans and premiums for insurance policies. Use RBI’s 3-month moratorium on payment of term loans only as a last resort. During the moratorium, interest would continue to accrue and get added to the loan amount. So it is prudent for you to continue EMI payments as per schedule, so that the overall interest payable does not mount up substantially and the loan can be closed on time.

5. Create a backup plan

Fear you are next in line to a salary cut or job loss? Introspect and create a contingency plan to tackle this mishap. Re-evaluate your financial standing and capacity to service debts along with meeting necessary expenses. Investments could be redirected to liquid assets to avoid sudden cash crunch and the risk of being a financial defaulter. We often forget that such situations can strike anytime and entrap anyone, even us. Hence everyone needs backup. So keep a plan B ready to ensure regular income stream.

6. Check insurance status

The current pandemic has reiterated the importance of insurance in uncertain times, so opting for a life or health insurance plan is another prudent decision, if you don’t have one. If you are yet to pay the premium on life/health insurance for the financial year 2019-20, as per the recent relaxation by the government, you may pay the same by June 30, 2020 and claim tax deduction for this financial year.

Source: ET

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