To say that 2020 was a whirlwind would be an understatement. The COVID-19 pandemic, combined with the economic recession and the associated oil crisis, only means despair. Four months have passed since the COVID-19 pandemic. As the number of cases in India increases every day, the chances of it all disappearing in the short term decrease. The pandemic has also hit the economy hard: large companies have announced wage cuts, laid off, and laid off their employees. The writing is on the wall: we are now looking at job losses and reduced income.
1. AN EMERGENCY FUND IS NOT NEGOTIABLE:
In these uncertain and dynamic times, there is probably nothing more important than having an emergency fund at your disposal. The general rule of thumb for setting up an emergency fund is that you should spend at least 3 to 8 months on your kitten. One of the basic rules of financial planning is the creation of an emergency fund. That way, even if you lose your job or cut your wages, you have enough to cover your necessary expenses.
2. HEALTH INSURANCE IS ESSENTIAL:
There is never a better time to buy health insurance that you have pushed back for so long. Even if your employer offers health insurance, it is still best to purchase your own health insurance. The health insurance offered by your employer is not valid if you lose your job.
Given COVID-19, the government has mandated all major general and independent insurers to offer standard, affordable, and basic health insurance called Arogya Sanjeevani Health Insurance. It is standard health insurance with uniform characteristics for all insurance companies. The policy offers coverage between Rs. 1 lakh to Rs. 5 lakhs and is available in multiples of Rs. 50,000. If you do not have an insurance policy, you can do so at any time as the coverage insurance is better than none. If you can afford it, take out insurance with coverage above Rs. 5,000 rupees. Health care costs will only increase in the future, so you should have adequate coverage.
3. IT’S ALWAYS GOOD TO HAVE A SECOND INCOME:
A sudden loss of income can put your finances and your future at risk. Unfortunately, for this reason, you cannot suspend your monthly utility bills and other necessary expenses. You still have to pay for them. Here, the second source of income is useful. You need to cover these necessary costs and overcome the difficulties. An additional allowance during the weekend or part-time work in the evening after work is a good way to earn this extra money.
4. AVOID ACTIONS WHEN YOUR GOAL IS CLOSE:
Investing in stocks is a smart way to increase your wealth and plan for long-term goals like marriage, retirement, etc. However, if your goal is only in a few years, it is best to shift your investments to safer ways that are not exposed to the vagaries of the market. When the market is at a high level, stocks offer solid returns. In times like these, when markets have not yet recovered from the COVID 19 debacle, it is safer to move your assets. Otherwise, you may miss your goal, and years of the disciplined investment may be missed.