COVID-19 has changed the world. Both our outside world and our inside world. Not only has it affected our mental and physical health, it has taken a huge toll on our financial lives as well.
Many of our goals and plans have hit a rock solid standstill. When will I take my next international family vacation? Should I buy my next car? How about starting my own business? All around us people have moved from being hopeful, to becoming fearful. Like every crisis, this one too has brought with it loud and clear lessons. Especially when it comes to managing our finances. One would have to be ultra foolish (like the ones going for COVID parties!) to ignore these.
Here is how the 8-point post COVID-19 money rule-book looks like :
1. When it comes to income, 'SINGLE' is a bad word
Aarti worked hard for 2 years - clocking over 10 hour shifts, sacrificing her weekends, and her leaves for the year were in single digits. All this in the hope, that she would get that exceptional raise and promotion which could take her closer to a life of her dreams. Enter COVID-19. Aarti has been suddenly laid off. She isn't alone. Only 1 out of over 120 million Indians who have lost their jobs due to the crisis. She is devastated. And it's clear to her now. Stop being 'single'. Getting together a side hustle, a weekend gig, learning a new skill which could create freelance opportunities like digital marketing, content writing, SEO experts, Data Analytics. The digital world has opened out a plethora of opportunities for those who are willing to explore. Make sure to have a secondary source of income besides having the primary source. No matter how little that be, it will add up over time. Don't be left high & dry again. Focus on your building parallel skills.
2. Save first, spend second
The days of indulging first, in the hope of your next salary clearing off your credit card bill are gone. This is the rainy day your mom always warned you about. Making 'savings first' as your sacred money mantra. These savings will save you back in such tough times. Maintain a separate bank account solely for your savings and feed that account your money. Watch it grow. Pat yourself every time you manage to save more than 50% of your income. The first rule - create your emergency fund. Your rainy day fund. Keep it in cash or fixed deposits or an easy sweep-in deposit available with your bank account. Park a portion in liquid mutual funds. Provision for at least three months of expenses that could be used in case of emergency.
3. Bye Bye indulgence - Hello, value
Now you look at your over-loaded cupboard and wonder why the hell were you spending on another black dress, when you already had 5?! If only you knew uncertainty was round the corner. Remind yourself that indulgence is a habit. A bad one. Just like eating junk food. We know it's choking our arteries, and yet we can't help digging into that bag of chips. Start with money affirmations like "I want my money to bring me joy", " I want to spend money on what really adds value to my happiness". Instead of indulging in retail therapy, spend time in thinking of what dreams you really want to fulfil with your money. Then create a budget to spend only on those things. If a good cup of coffee brings you peace, indulge in high value coffee beans. But if you are don't find value in buying clothes, cut down on it.
Don’t waste your resources on something unnecessary. Buy what is of value to you.
4. Protect your loves one first
COVID situations have taught us yet another important lesson. Protecting our loved ones first. None of us are invicible. Plan to have a protection, an insurance for the health and wealth of your family. Let the family come together to discuss these matters - however morbid they might seem. Discuss about the health insurance cover available for everyone, not just from the company but individual as well. It is advised to have health insurance for every member of the family at least for those above forty. Keep health insurance for senior parents separate - not only part of family floater. Discuss about expanding the family income from single to double - share the load. Discuss all loans taken and the insurance coverage against those. Discuss the life insurance cover is adequate to meet monthly expenses as well as as major family goals like kid's education. Money topics are the biggest cause of marital rift and ironically the least discussed. Break the chain. Open the communication to protect the ones you so deeply love.
5. Learn to Invest
The last but not the least! After you save enough for your emergency, don't let the extra money simply sit in your bank. Make this money work hard for you. Don't depend on advise from just anyone. Take the time to invest in learning about your money goals and which investments suit your risk-return profile. We all are unique and so should our investment portfolio be. Would gold bonds make sense for you or mutual funds or both? If both, then how to decide the amount in which? What are the risks involved? Before jumping to sign a cheque with your advisor - educate yourself about these products. Take a class. Get a money coach. Read experts' views. Speak to friends from the industry. Do your own research. Developing your own plan is the only strategy now. It could take time. But it will buy you years of peace of mind.
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