This global pandemic has created havoc in people’s lives, both personally and professionally. Because of the severe impact of this virus on the economy, there may be a situation where some may lose their jobs, or there could be a salary cut for a while. But as an investor and financial strategist, I am writing this not to create panic but to take effective measures during these trying times so that all of us are well prepared to face any situation.
Let me share some tips to handle any unfortunate situation.
Assess your personal finances
First of all, the key is to create an emergency fund and have your contingency plan ready if you lose the job or there is a salary cut, whether it can be for managing the EMI’s for next few months or managing the household expenses. If you don’t have emergency funds, please build an emergency fund immediately.
All the salaried people are covered by their employers to provide them with a health cover. Hence, in case of job loss, you have to buy a health insurance policy immediately; otherwise, any health emergency can create havoc in your life.
Focus on your expenses, cash flow and budgeting
Because of this scenario, please prioritise your expenses and cut down where the need arises like going out for movies, restaurants and vacations etc. as there will be many expenses and investments like insurance premium, EMI’s, which can’t be avoided.
Don’t dig into retirement corpus, take loans from family and friends
If there is a loss of job take a loan against your PPF, gold or property where the interest rates will be lesser then the personal loan, and you get to keep your assets after payments. Things to avoid are increasing your credit card expenses as it comes with a high-interest rate or redeeming your retirement fund.
One can also borrow from friends and family if the need arises and repay them when the crisis settles down.
Repayment of EMI’s and premiums
As a relief measure, the government has put a temporary relief of three months, but even if after that, if you are unable to cope up with these expenses then one can temporarily stop the investments and ones like insurance premiums which can’t be stopped, you can think of making those policies paid up.
Also, for home or car loan, they can be either put on hold for some time or EMI’s can be reduced after talking to the bank.
Do these things to stay afloat in any situation:
- Take part-time jobs so that you don’t lose out in the job market because of non-employment
- Keep upgrading your skills with the plethora of online options in your own field
- Try your hand with your entrepreneurial streak; the only idea is to limit the expenses
- Explore other options as you never know if it can result in a total paradigm shift according to your income perspective
- Activate your professional network and don’t hesitate to seek help
What to avoid in stressful situations:
- Don’t panic and stress out
- Don’t avoid banks or creditors as it can further derail your plans
(Rishabh Parakh is the Founder and Chief Gardener of Money Plant Consultancy)