Spices and baby food will be tested across the country: FSSAI

Financial management during Covid-19

When the Covid-19 pandemic hit the country last year, many of us were caught off guard as we were not financially prepared to face the disruptions. The sudden lockdown in the country made us realise how financially vulnerable one can be, especially with home loans and other non-discretionary items such as school and medical bills to be taken care of.

Here are four money mantras that can help us stay afloat in these challenging times:

1) Emergency Fund

First and foremost, you should have an emergency fund that can sustain you for at least six months in case of any adverse situation. There are many people who lost their jobs or had to take pay cuts during the first wave of Covid-19. Some savings can give you much-needed cushion while you sit down and chart out your future plans. The absence of liquidity can make one impulsive, adding to the already chaotic phase of life.

Lesson: Always keep an amount equal to at least six months of your expenses in liquid assets such as FD and ultra short-term debt funds.

2) Health Insurance

In the absence of health insurance, you might need to liquidate your investments that you had saved for rainy days. Though most of the Covid-19 cases are getting treated at home, but at times co-morbidities may lead to hospitalisation for which it advisable to have a health insurance policy in advance.

Lesson: Though there are short-term Covid-specific policies available in the market, it is advisable to go for a comprehensive health insurance plan which not only covers Covid-19, but all kinds of hospitalisation, giving you much wider coverage.

3) Term Insurance

Having term insurance gives one mental peace during these unprecedented times as the policy offers the family a lumpsum amount on the death of the insured. Though emotional loss can never be filled, financial security can certainly help the family in sailing through the bad times.

Lesson: Buy a term plan of at least 10-15 times your annual salary so that the lump sum amount can take care of your family needs in case of any untoward incident.

4) Minimum Debt

Covid uncertainty has made us realise how we should not accumulate debts as any disruption in regular flow of salary income can turn the ride topsy turvy.  If you cannot pay for something, may be you cannot afford it.

Lesson: As the new wave subsumes the country, keep a check on non-discretionary items, which can lead you to a vicious circle of debt.