Policenama Online – The economic freefall due to the coronavirus pandemic has left us all in despair. Businesses are shutting down, people are losing jobs, and the economic situation is about to get worse. But the bills won’t wait for this global problem to get over. Therefore, smart financial moves in an emergency like this are necessary for survival.
I am sharing some tips on how to manage finances in this pandemic.
Re-evaluate Your Priorities and Alter Your Spending Habits – We are in the starting phase of the economic slowdown, which means that the situation can get worse. So, it’s better to prepare for it now, especially if you think that you’re going to get hit by the recession.
Reassess your spending habits and see where you can cut back. Even millionaires budget their expenses to build wealth. Pull together your spending history and make a budget. If possible, try to live below your means because, given the situation, your priority should be creating an emergency fund for the near future.
Get Your Debt in Order – Paying interest amounts separately against multiple loans during the pandemic is not a wise move. You should focus on minimizing the interest you pay every month. So, consider taking a single debt consolidation loan to convert separate EMIs into a single EMI. There are many personal loan options available online that you can not only use to consolidate debt but also to meet essential expenses during an emergency.
Refinance Your Loans – Interest rates on loans have seen one of the biggest drops of all time. So, see if you can refinance the loans you may have and get a lower interest rate. You may require moving to a private lender, which would mean that you will have to give up on some government loan benefits. But if you’re paying higher interest amounts from your savings or limited source of income during this crisis, it is best to choose lower interest rates over public benefits.
Moreover, the government has waived interest on student loans. So, if you have a student loan, act quickly so that the payments you make apply to the principle amount.
Build Up Your Credit Score – I have had many discussions over the past few days with people who never thought they would have to take a loan. Clearly, this pandemic has made them rethink. You can fall prey to this threatening situation too. So, it is better to stay prepared. Build up your credit score so that you can take a loan either to keep your business from crashing down or to meet your expenses. Consider taking small personal loans that you can repay on time. Based on your credit utilisation and positive payment history, your credit score will go up.
Start an Opportunity Fund – People are panicking and withdrawing all of their investments in fear that the recession may become unrecoverable. But what goes down always comes back up. Similarly, markets will go back up, perhaps in the long term. So, do not be impatient and do not withdraw investments unless you absolutely can’t afford them. This way, you can make a significant profit when stocks plunge.
You can take a few other precautionary measures, such as diversifying your investments across various asset classes, creating multiple sources of income, and reusing and recycling as much as you can. During this time of crisis, we must be mindful of every penny we spend. Only then will we be able to sail smoothly through it all.
Author Bio:
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit-line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions at [email protected].