The obstacles that prevented the spread of Covid-19 infection led to a widespread economic crisis in many organizations after the closure or suspension of activities.
The roadblocks fighting the spread of the Covid-19 infection have caused serious economic problems following the closure or suspension of business operations in many organizations, from small and medium-sized enterprises (MSMEs) to large enterprises. As a result, many people experience financial difficulties due to the loss of their job or salary – in some cases, the payment of the entire salary is stopped.
To manage your finances in such uncertain times, you need to follow the most important things in financial planning.
The first step in dealing with this situation is to set up an emergency fund. Sufficient amounts must be kept in liquid form for a minimum of six months – cash, savings bank deposit, fragile fixed deposit (FD), liquid / short-term funds, etc. – so that the person can go through a period of crisis without much trouble.
While the country is struggling with the second wave of Covid-19, many people remain worried about their personal finances. To be prepared for such unprecedented circumstances, it is important to maintain an emergency fund that can cover at least three to six months of basic needs, such as food, rent, and monthly bills, “said Raghuvir Gakhar, CEO of PC Financial, said.
Insurance is the most important financial cover against unforeseen events. Individuals must purchase life insurance to protect their financially dependent family members, as well as health insurance to protect their savings in case of significant financial costs during hospitalization.
“The current health crisis has also highlighted the need for a high quality of life and health insurance that provides broad coverage,” Gakhar said.
If the emergency and/or insurance fund is not sufficient, someone may need to take out a loan. To get a loan at a lower interest rate, you need to maintain a good credit score. Requires timely repayment of existing loans and credit card charges, etc. Finished. In addition to the loan, you can also opt for a credit line to quickly access the specified limit.
“It is also advisable to have money on hand to maintain a good credit score, as this will help you obtain pre-approved loans when you need the money,” he said.
The current low-interest rate system can encourage you to buy long-term assets such as cars, air conditioning, etc. It is sold on credit, as well as real estate, such as real estate. However, taking out a long-term loan creates an obligation to spend future income to repay the loan. The loss of income in emergency situations, such as the Covid pandemic, exacerbates financial problems. Therefore, it is better to avoid unnecessary credit purchases to reduce future financial costs.
Another concern is the purchase of real estate due to low-interest rates. The decision must be made after assessing the short- and long-term consequences of the pandemic. Lastly, it is important to maintain a healthy debt-to-income ratio and not exploit the potential for future income, ”Gakhar said.