As COVID-19 cases in India have surged past the 1 million mark and show no signs of abating anytime soon, both mental and financial scars have become prominent for many salaried and self-employed across the country. The latest survey from the Reserve Bank of India (RBI) has expressed fear that COVID will hit tourism, MSME and aviation industries very hard. Both banks and non-banking finance companies (NBFCs) have already tightened credit norms when reviewing loan applications of employees involved in these industries.
The reason for this tough stance from lenders is obvious in the light of massive salary cuts and job losses. Things are getting tougher for people working in other sectors too. Despite all odds, one can still do some changes to their financial routine and stay strong. Here’s a list of things you should do as COVID-19 makes further inroads into the country.
Figure Out Fast What is Necessary and What is Not
Before making a financial management plan, you should know what is important to have and what is not so. Getting your financial priorities right is an important step forward in these trying circumstances. However, many just set priorities for the namesake. When it comes to making the right call to achieve such priorities, they take a step backward and undo the plan there itself. If your priority is to be financially secure amid reduced salary, you should not spend too much on stuff like entertainment.
Stop or Cut Credit Card Shopping for a While
With most being reduced to stay at home given the rapid rise in Coronavirus COVID-19 cases, the focus is now all on online shopping. Many use credit cards for online shopping, but the plastic instrument often leads to impulsive expenditures. The fact that credit card companies allow you to pay the due partially makes you shop more with the same. Even if you pay the minimum due levied at just 5% of the total outstanding on or before the due date, you can avoid late payment charges. But that’s a very small comfort you get. In exchange, you will need to pay a hefty interest of around 2.5%-3.5% per month or 30%-45% a year. So, the choice is yours – whether you want to shop for absolute necessities and be able to pay all on time or spend like anything and be reduced to pay the due partially.
Keep Enough Liquid Cash with You
Liquidity is often in demand and more so in the current times when you may require cash anytime. So, savings become very important here. Set a savings target for you and adhere to it month after month. If you have been working from home like most of them are, you could make the most of virtually no expenses on travel. The money saved on travel can be set aside for emergency requirements. Plus, you can control expenditures on stuff like entertainment. Even in normal circumstances, financial advisers suggest a minimum saving of 10%-15% in a month. You can increase it in COVID-19 times provided you are getting your salary on time and cut all your expenses on fuel and travel.
Shall You Look for a Home Loan Balance Transfer in These COVID Times?
A home loan balance transfer could be the one you should opt for it to reduce the interest burden on your budget. However, lenders have gone a bit tough approving balance transfer deals in the COVID era. Maybe they won’t approve it for someone facing salary cuts. But if you are getting salaries on time and your credit score is good, an attractive balance transfer deal is right on the card. This will help ease the monthly EMIs as well as interest payments. If you are assured of timely salary disbursals, maybe you should go with the same EMI on a balance transfer. Doing this will cut short the tenure by some years and save more on your interest payments.
Invest in the Right Avenue
If you have already invested money in equity instruments for your long-term goals, you need not worry even as the economic crisis triggered by COVID-19 has reduced the value of your investment by some. If the fund you have chosen has delivered consistent returns over the long term, the fluctuation you may see now will be a very short-lived one. The inherent strength of the fund’s portfolio will take it through these tough times. Keep up the good work by putting money in SIPs. So, if the net asset value (NAV) of your fund has gone down now, it will buy more units at a lower price. Tomorrow when the market goes up, the accumulated units could help average out the cost of your investment. Even if you can afford high risks on your mutual fund investments, you can still create space for investments in debt funds or fixed deposits, given the uncertain times that we are witnessing now on account of rising COVID cases.
Consider Health Insurance Plans Offering Cover for COVID-19
At a time when people are either losing their job or having to live with a reduced salary, having no health insurance will force you to use your hard-earned savings for the treatment of COVID-19 if you get infected by this. So, if you do not have a health insurance plan yet, have it ASAP. Although the regulatory body Insurance Regulatory Development Authority of India (IRDAI) has told insurers to cover COVID along with other ailments and conditions, you should check the health policies and their coverages. You can also have a dedicated COVID insurance plan. Check the financial viability by seeing the premiums on a conventional health insurance plan and a COVID plan. If you can afford the premium payment of both, there’s no problem in having the two.