The second wave of Covid-19 is truly upon us and is likely to influence the way we work into the future. Though the pandemic has created overwhelming fear, what's causing even more anxiety is the resulting financial pressure arising out of this situation of uncertainty. With crores of people being furloughed, incomes have taken a huge hit. Even the lives of those who haven't lost their jobs have changed completely, with work-from-home becoming the norm for many. As a result, the financial setup of many people may no longer match their needs, and finding a way forward can appear impossible. But with a realistic plan, it is possible to navigate this uncharted territory. Here are five ways to go about it:
Revisit Your Finances And Prioritise Your Goals
With economic activity taking a hit, your income and finances, too, may have been hugely impacted. This would have put a lot of pressure on your monthly expenses, premiums, etc. As a result, you need to realign your financial goals to ride out this crisis and get through relatively unscathed. Download your bank statements, and look at where your money is going and what's coming in. That will give you a fair idea of your true financial position, and help you create a realistic budget to move forward. Review your expenses along the way.
Find Out If Your Bank Can Offer Some Respite
If you have lost a source of income, you could approach your bank for some support or leniency in terms of loan repayment to tide over the tough phase. Find out if the bank has loan pauses or freezes for temporary relief. However, before that, make sure you have a plan for how you would catch up on missed payments because a pause on the loan will not prevent the interest from accruing on the outstanding amount.
Don't Take Hasty Decisions, Be Patient
Soon after the coronavirus pandemic broke out in India, the stock market took a hit in March last year, creating a wave of panic among investors. They either withdrew their investments or halted their systematic investment plans (SIPs), fearing further market collapse. Never do that. The key here is to be patient. If you don't need the money for immediate use or are fortunate enough to still have your job, continue investing small amounts of money in different equity funds in a staggered manner.
Start An Emergency Fund
An emergency fund, which can be easily liquidated, is essential in times of a crisis. Start setting aside a certain portion of your income now, if you can spare. You need to ensure that the emergency fund is capable of taking care of your expenses for about a year at least.
Be Prudent When It Comes To Loans
Review your loans and other debts, and reduce your dependence on those. Though some loans such as those taken for housing or education are necessary, never fall for loans to fund your lifestyle. Check out new products in the market that could better suit your financial needs. If need be, switch your loans to another bank if they offer you better interest rates. Only if you have sufficient liquidity and a lot of surplus money, this would be a good time to use some of it to pay off your high-cost loans.