Who would have thought at the beginning of this new decade that in the first quarter of the year, we all will be staying at home to protect humanity? We all thought that this decade will give birth to new technologies and innovations and the economy of our country will boom, but here we all are reading this article from the comfort of our home.
Due to the recent outbreak of coronavirus pandemic, the government of various countries has imposed lockdown as a precautionary measure. People from the corporate sector are working from home, whereas, a major chunk is unemployed right now. We all are eagerly waiting for this pandemic to end, but once it will end, we all will be facing a new issue. Due to the lockdown, many businesses have stopped and had given the major hit to the economy. We all will soon face a global economic crisis. So, it is high time for you to plan your finances. We have planned the list of things that can help you plan your finances during a lockdown:
Prepare Emergency Fund
This is one of the most important and first steps towards planning your finances in the lockdown. You need to have a sizable emergency fund that can help you survive the upcoming financial crisis. Take extreme possibilities such as losing your job and falling sick into consideration while preparing the emergency fund. Make sure you have at least three to six months’ worth of expenses saved, if not, then act now and increase your emergency fund.
Keep More Liquidity
Make sure you have enough cash in hand. For instance, if there is a medical emergency during the lockdown, keeping money handy would be very helpful. Make sure this liquid emergency money is accessible to your family members also.
You should also prepare a list of assets that you can liquidate in case of an emergency. Your assets would typically include gold, additional property, equity, etc. it is also advisable to not take loans against any assets during the lockdown.
Cut Down Unnecessary Expenses
These are strange times, and it is advisable to use your capital wisely. Cut down unnecessary expenses by making a list of all non-essential expenditures and rank them in order of importance. After this, start cutting down items that are least important for a few months. This way you can save a load of money, which can be used in the future. Also, you should avoid using credit cards, if possible. Instead, use the debit card until this financial crisis tide over.
If you already have a life insurance and health insurance policy, then it’s great. But if you don’t then straight away go and buy them. In the case of life insurance, buy low-cost term insurance. You can buy a health insurance policy from any reputable insurance provider. It will cover medical and hospitalization expenses. You can buy health insurance online form the comfort of your home. This health insurance policy is the friend that will help you financially in the time of need. Not only it secures you financially, but under section 80 D of Income Tax Act 1961, you will be eligible for tax benefits.