Did you expect a week back that you would be locked in home?
A growing pandemic can throw plenty of things into a tizzy – lockdown, restriction of movement, limited accessibility to essentials and change in work style are all a phenomena, one is trying to adjust to.
So, are you financially ready to handle such a pandemic? While one cannot be completely geared up for such unpredictable circumstances, but there certainly are things you can do to plan for such an eventuality.
Let's look at a few pointers that you may put in place to tide over pandemics:
We cannot stress the importance of this point enough! Having a contingency fund in place is absolutely crucial – It can be used to cover medical and other expenses and can compensate for temporary loss of income in a pandemic situation. The key aspect of a contingency fund is that it should be highly liquid. The typical thumb rule is to have an emergency fund of 6 months’ worth of expenses.
Curtail expenses for essentials and fixed costs:
Desperate times call for desperate measures! Cut out all unnecessary expenditure in such a situation. Lay off unnecessary luxury purchases and frivolous online shopping. Save this money to instead rebuild your contingency fund or to possibly fund additional medical expenses that may arise. This assumes extra importance if your regular income gets effected in the pandemic but several of your fixed costs remain -such as rent, staff costs etc.
Don’t take investment decisions in a panic:
Market investments are most likely to lose significant value which can cause you to panic and liquidate in an attempt to recover as much of your money as possible. Be calm and seek professional help to assess your portfolio especially if your investments are in affected sectors, before taking any investment decisions.
Check your insurance:
While its essential to have a health insurance in place for yourself and your family, it’s also important to know what all it covers. Check with your insurance company or TPA, the extent of coverage of medical expenses related to the pandemic. This can help you be prepared with spare funds to meet uncovered medical costs.
One of the biggest impacts of a pandemic is on mobility of people. You cannot use your money if you cannot access it. So, make sure you have all your net banking and online trading accounts set up and in active use. This can be extremely important when access to brick and mortar banks becomes difficult.
A pandemic is one of those rare events that is difficult to predict and can be even tougher to control. But its very much a reality and definitely requires some extra attention from you to financially gear up for it. So do not panic and get your finances in order so that we can brave this pandemic head on!
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.