Managing cash can be a daunting task. A financial plan can assist you with being on target and to set out a road map for you to achieve your goals. The second wave of Coronavirus has brought about one more series of lockdowns to contain the pandemic. The ongoing emergency in the nation is making us question whether our personal finances are aligned to manage such circumstances. Against the backdrop of these extraordinary conditions, let us check out certain methods of managing cash in such situation in detail:
Emergency fund: Given how questionable the times are, you can at this point don’t stand to deplete your monthly income without saving anything for what’s to come.
“One thing the current crisis has taught us is the importance of an emergency fund that will help you last at least three to six months. It means you should have enough money to be able to pay for your basic living expenses, including food, rent and monthly utility bills,” said Ilica Chauhan, vice-president, PC Financial.
Insurance: Another significant aspect is to have health and life insurance plans. The pandemic has additionally featured the requirement for health insurance, which offers wide coverage.
Good credit score: It is advisable to assemble and keep a decent credit score as it is the need of great importance. “In an emergency, when you need cash, a credit score can help you get pre-approved loans,” said Chauhan.
Comprehend the importance of credit scores and know about moneylenders who forgive these credit scores.
Enough liquidity: if there should arise an occurrence of liquidity crunch, and particularly in circumstances, for example, the one we are confronting now, it isn’t attainable to totally rely upon others for financial help. Subsequently, people should put their cash in such mediums or instruments that can be handily exchanged when required. At the point when you start budgeting, keep to the side a specific amount that you might require if a circumstance, for example, a lockdown repeats.
Debt to income ratio: In addition to spending on groceries, electricity and water bills, and so on, certain individuals likewise spend their incomes on finances like home loans, car loans, and compared equated monthly instalments (EMIs). “Since current times are unpredictable, it is vital to maintain a healthy debt-to-income ratio with your current income and not necessarily splurge on the basis of future earning potential,” said Chauhan.
As emergency circumstances are unusual, one can never be completely ready for them, yet following these small steps can assist with enduring troublesome occasions.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Endowment Lock journalist was involved in the writing and production of this article.